Holiday Portfolio: Some Sparklers, a Few Duds

For the Holiday Portfolio, this has been a year of fireworks with a couple of duds.

As summer enters full swing and we celebrate America's independence, it's time once again to take a look at TheStreet.com's Holiday Portfolio.

Although recent volatility has caused some indigestion, the stock market has generally enjoyed a good six months. The Holiday Portfolio's diversified nature should allow it to yield results that are roughly in line with the broader markets. With the help of a big energy performer, the portfolio is slightly ahead of the S&P 500, used as our benchmark here.

Before digging into specifics, let's review the purpose behind the Holiday Portfolio, now in its sixth iteration.

365 Days a Year

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, we review the five stocks selected at the beginning of 2007 and the outlook over the coming weeks.

The 2007 Holiday Portfolio continues to get a boost from energy holding Carrizo Oil & Gas (CRZO Quote). Now up more than 40%, Carrizo has successfully grown its natural gas production in the first half of the year and become a member of the billion-dollar market-cap club.

The company focuses on the shale plays of Texas, Arkansas, Alabama and Mississippi. Its growth in Texas' Barnett Shale has pushed natural gas production levels to all-time records, and it's drilling its first well in the newfound Floyd Shale in Mississippi. In addition, Carrizo could benefit if its exploration efforts along the Gulf Coast of Texas and Louisiana are successful. The company is testing a 20,000 foot-plus exploration well that could lead to the discovery of a natural gas field with more than a trillion cubic feet of natural gas reserves.

I still like Carrizo for its production and reserve potential, but the stock's recent performance and challenges suggest that profit-taking might be around the corner. The Floyd Shale well ran into some mechanical problems, requiring more time to complete and test the exploration prospect. In addition, testing on the deep exploration well along the Gulf Coast -- the Mega Mata prospect -- continues without any announcement from the company. The tests may well prove positive, but the current stock price anticipates success.

That said, Carrizo recently announced a significant discovery in the North Sea with partner Oilexco. The prospect is much larger than expected and could yield significant value to Carrizo as it is developed in the coming months.

	Recent Price	Price 12/31/2006	Price Change	Current Dividend	Current Yield	Yield At Cost
Altria (MO:NYSE)*	$70.14	$64.41	8.90%	$3.44	4.90%	5.34%
Archstone-Smith (ASN:NYSE)	$59.11	$58.21	1.55%	$1.81	3.06%	3.11%
Bank of America (BAC:NYSE)	$48.89	$53.39	-8.43%	$2.24	4.58%	4.20%
Carrizo Oil & Gas (CRZO:Nasdaq)	$41.47	$29.02	42.90%	$-	0.00%	0.00%
Microsoft (MSFT:Nasdaq)	$29.47	$29.86	-1.31%	$0.40	1.36%	1.34%
Unweighted Average			8.72%		2.78%	2.80%
S&P 500			6.01%
*Adjusted for Kraft transaction Source: Company Reports, Bloomberg, TSC Research