First New Entry: American Express

American Express Co. (AXP) is one of the companies in my current virtual million dollar portfolio that had not been mentioned yet in a previous post. Currently, American Express, looks to be relatively undervalued, with some promising fundamentals. It has a trailing price/earnings ratio of 17.92 and a forward price/earnings of 15.87. Generally I like to average these two values, giving an averaged trailing & forward price/earnings ratio. This value comes out to 16.91. I had previously mentioned Benjamin Graham in the post on Some Great Financial Reads. Well, he warns against investing in stocks with price/earnings ratios greater than 20, so Amercian Express fits the bill so far.

Here is some more interesting news regarding American Express:

Motley Fool - Credit Card Payments are Doubling - While this may be bad for consumers, it is great for the companies.

newsratings.com - American Express "overweight" - "According to the analyst, Amerian Express' payment network is likely to continue to have a competitive edge over Visa."

Forbes.com - Amex Remains Unaffected By Visa's Growth - "Bear Stearns analyst David Hochstim maintained an "outperform" rating and $67 price target on American Express following an analyst meeting held by competitor Visa on Friday."

thejournalnews.com - Here an ad, everywhere an ad - "DeWitt said he has heard discussion of placing ads near the security areas of airports. Travellers asked to take their shoes off might look down and see an American Express logo on the rug beneath their feet, he said."

Current Portfolio Elaboration

As some readers may be new to this blog, I wanted to elaborate on various positions within my virtual million dollar portfolio. Here is a list of the positions that are currently in this portfolio, that have been mentioned in previous posts, with the relevant links. I will get into the newer positions in a separate post. Here is also a link to a recent chart of the portfolio allocation.

Though it's true that the posts from the following list may be a couple of weeks old, my intrinsic thoughts on the merits and values of these companies have not changed:

(ALL) - Allstate Corp. - Allstate Will Weather the Storm

(BAC) - Bank of America Corp - I'm Banking on Bank of America Corp

(BRK.B) - Berkshire Hathaway - Bought Buffet's Berkshire Because it's a Bargain

(DEO) - Diageo plc - Liquor Stocks and Hair of the Dog

(FNFG) - First Niagara Financial Group Inc. - A Smaller, Better Bank

(INTC) - Intel Corp. - Intel Added, to Tech-up the Portfolio

(JNJ) - Johnson & Johnson - Wrigley's Disappoints, Added Johnson & Johnson

(MMM) - 3M Company - Three M's for 3M Company

(PFE) - Pfizer Inc. - Pfizer Makes Great Portfolio Medication

(WWY) - William Wrigley Jr. Co. - A Sweet Tooth for Wrigley's Stock Price

Past Performance, and a New Portfolio

So. Some of the options that I had invested heavily in with the virtual portfolio paid off, namely the $40 puts on Advanced Micro Devices Inc. (AMD) and the $45 calls on Bank of America Corp. (BAC). With Advanced Micro Devices, I saw an unbelievable price/earnings multiple of 100, and thought that if I waited long enough there would be a downward draft. With Bank of America, I saw an extremely low price/earnings multiple that I thought had to move up. Granted, there were other options that I was holding that did not move in my favor, but these two did to the tune of a few hundred thousand dollars.

I had mentioned in my first post that I had previously monitored my virtual investing with a Fall 2005 Virtual Portfolio, from 9/9/05 through 11/18/05. This first virtual portfolio ended with an equity value of $1,082,951.37, or an approximate 8.3% return over a 10-week period.

I ended the recent Winter 2006 Virtual Portfolio, which was from the period 12/30/05 through 3/17/06, with a net equity value of $1,198,038.49. This is equivalent to a 19.8% return over an 11-week period.

Recently I began a new Spring 2006 Virtual Portfolio, managed again by Stocktrak. This is part of a National Investment Challenge through eFinancialCareers.com and Merrill Lynch.

Here is a link where you can view the current allocation of this new virtual portfolio, as of 3/24/06:
Spring 2006 eFinancial allocation 3/24/06