Last time, we introduced you to the Investment Analysis Group (IAG) at the New York University Stern School of Business. The undergraduate investment club was about to add Intel (INTC) - Get Report to its portfolios. Now, in the second month of their fall semester, IAG is on the lookout for some S&P benchmark busters. Here's an update on their progress.

Each of IAG's two portfolios -- the growth oriented "All-Star" and the value-focused "Initiative" -- trail the S&P by close to 4%. This no doubt weighs on the student

portfolio managers trying to live up to the group's lofty historical performance -- IAG has generally trounced the S&P (see

"How a Group of College Kids Outtraded the Pros") .

But the school year is still young, and good decisions made now can have a big impact on the value of the group's model portfolios. So, what companies do IAG's members like right now and what have they learned about stock selection along the way?

Week Three: A Good Story Needs Good Numbers

Caraustar Industries

(CSAR)

was presented during the IAG's first October meeting. Past selections were predictable for college students -- alcohol (

Diageo

(DEO) - Get Report

and computer chips (

Intel

(INTC) - Get Report

. Caraustar, a recycled paperboard manufacturer, seemed to be a bit of a departure. Still, on Friday, October 5, Mattan Griffel, Michael Tanzer and Zhuoya Wang presented the stock.

Griffel says his team "picked Caraustar up off a

52-week low

screen" and did some

fundamental research on it. According to Griffel, the premise for buying Caraustar was that it "was a dirt cheap paper company, trading at way below

book value" and that the company "was

probably going to get

bought out sooner or later (see

"How to Play the M&A Game")."

But the sentiment didn't seem so apparent to other members of the IAG, who passed on the stock.

What went wrong with the team's pitch? Griffel says, "The difficultly we really had was in giving good

quantitative approximations of the value of Caraustar's

business segments." Most of the Caraustar presentation team's investment thesis was "

qualitative." Griffel adds: "We used conservative numbers to imply that Caraustar was very

undervalued, but we should have used more historical

merger and

acquisition comparables to give members a better idea of the

company's

intrinsic value."

Sometimes, timing is important. If Griffel, Tanzer and Wang would have made their presentation a few days earlier, perhaps the IAG members would been more receptive to their Caraustar pitch. Griffel recalls: "Unfortunately, our thesis came true two days before our presentation when Caraustar announced that it sold off its recovered fiber division to

Sonoco

TheStreet Recommends

(SON) - Get Report

. The stock price shot up 10% and it made it that much harder for us to present as a buy."

Week 4: Highflyers May Not Be for Everyone

On Friday, October 12, IAG's portfolio managers Todd Tamagnini and Neal Sangani went head-to-head in a "battle meeting" over whether or not

Crocs

(CROX) - Get Report

, which was founded on the premise of making the "world's perfect boat shoe," should remain in the group's portfolios. Tamagnini called Crocs a sell, Sangani called it a hold.

Ultimately, the IAG decided to side with Tamagnini and sell off their existing shares of Crocs. According to Sangani, his fellow IAG members (especially the young and new members) "are not conditioned to analyzing these types of

growth companies." Sangani wrote on the IAG's All-Star Portfolio blog, "Even if they take the next step and look at the fundamentals of the company, they see triple-digit

growth rates, and cannot see how that business can keep growing at a fast clip."

The fact that the IAG has thus far passed on many of the growth-oriented presentations might indicate that members aren't yet comfortable with the idea of putting the group's reputation on the line for less established

small-caps and

mid-caps like Crocs (see

"Small-Cap Spotlight: Should You Keep Wearing Crox?"). Still, the potential upside to these kinds of stocks might make the

opportunity cost of ignoring them a high one. We'll have to wait and see how IAG plays their next growth pick.

Week 5: Every Vote Counts

Altria

(MO) - Get Report

, the tobacco giant that changed its name from Philip Morris back in 2003, became the second "

sin stock" to cross paths with the Investment Analysis Group this year. Both the Altria presentation group -- which consisted of Jonathan Goto, Leo Efstathiou, and Katy Zhao -- and the

Diageo presentation group were looking for stocks that weren't as susceptible to consumer behavior (smokers

have to

smoke, right?) as others, and picked their respective sin stocks as a result.

According to Goto, he's "been seeking stocks in non- or counter-

cyclical industries, with strong, growing, and/or dominant market positions trading at a

discount to peers." Goto says these investable non-cyclical plays are "hard to find, but I think Altria is one of those stocks."

Of IAG's decision, Goto says, "The group voted no to

buying Altria in a possibly unprecedented close vote of 32 to 31." Looking back on the Friday, October 19 presentation, Goto says, "I think we failed to deliver our investment thesis as powerfully and succinctly as we could have, instead covering too much ground with

obvious points, such as the

dividend yield and comparison to Altria's earlier

Kraft

(KFT)

spinoff."

Regardless of the group's investment decisions, Goto still thinks that Altria is a good stock to own. Why? According to Goto, "The company has some solid growth prospects, involving international markets, particularly China, which I don't think the markets are pricing in. We are hoping that the spinoff of Philip MorrisInternational will serve as a catalyst for realizing that value."

There it is: no to Caraustar, Crocs and Altria. Will the IAG say "yes" to any company other than Intel this year? Will the portfolios be able to catch up to the S&P? Stay tuned.

Jonas Elmerraji is the founder and publisher of Growfolio.com, an online business magazine for young investors.