Holiday Portfolio: New Year, New Realities

It's a new year, and with it come new realities.

Crude oil is down 15% and equity markets are trading at or near record highs. While some question the vitality of the economy, others are worried about inflationary pricing pressures. This certainly will be a year to watch geopolitical events and their potential impact on the markets, from the U.S. policy in Iraq to the actions of a rebel leader in Venezuela to the challenges to the free market system in Russia.

Simply, 2007 is already shaping up to be a dynamic year for global markets. Yet, one thing remains the same: It's time for the sixth annual edition of TheStreet.com Holiday Portfolio.

All Year Long

The concept behind the holiday portfolio is straightforward: I select a group of five stocks that I believe deserve watching over the next 12 months, and I follow them -- regardless of their performance -- throughout the year. I'll revisit the portfolio on each market holiday and, at times, make comments about the stocks in RealMoney's Columnist Conversation. The only way a stock is removed from the portfolio is if it merges with another company or ceases to trade on a major exchange.

The portfolio serves two purposes. First, it follows the fundamental progress of a group of stocks over a lengthy period of time. My hope is that the portfolio will serve as a forum for in-depth discussion of investment decisions and company strategy, and reinforce the importance of ongoing portfolio analysis. Second, it provides an opportunity to look at both short-term trading strategies and longer-term investment strategies with the same stocks.

Today, I'll introduce the five stocks we will track through the balance of the year and provide some quick comments about each. In coming weeks I will break down each pick with more detail in columns and through the Columnist Conversation.

Finally, the readers will speak. For the past two years I have selected one stock from our cadre of readers to include in the holiday portfolio. I'll do so again this year, and will introduce it next week. With hundreds of reader suggestions, I have a tough choice ahead. Look for a complete recap of reader selections -- the good, the bad and the truly ugly -- in the coming week.

Now, here are the five to follow in 2007.

The Holiday Five

The holdover for 2006 shouldn't be a surprise to longtime readers of this column. Altria(MO Quote) is simply an equity portfolio workhorse that deserves a place in just about any core equity portfolio.

The consumer conglomerate is a cash-generating machine with solid global growth prospects, a great history of dividend growth, and solid management. And, with the potential spinoff of the Kraft(KFT Quote) unit a possibility in 2007, event catalysts are also present.

While legal risk exists, the company has done a solid job of mitigating such risks in the past and that should continue in 2007. Altria is simply a stock that provides many ways to win, which is the reason it stays in the 2007 holiday portfolio.