Peter J Sander - The 100 Best Stocks to Buy in 2013

While I wasnt expecting a huge overhaul, paying for another book to read about 12 new companies in the list doesnt seem like a bargain at all.

So goes part of the critique of our 100 Best Stocks You Can Buy 2012 by a disgruntled D. Ng on Amazon.com shortly after its release.

We take his critique (as we take all critiques) to heart. We know that no book is perfect, and we know that no investment analysis or list of stocks is perfect.

But the fact is, we think that changing only 12 stocks on a list of 100 best stocks in a given year is a pretty good thing. That implies that the list of stocks we decided was best in 2011 must have been pretty good. And while the story on the 12 new stocks will no doubt interest Mr. or Ms. Ng, wouldnt it also be of interest, as well as a useful piece of information, that the other 88 stocks were still on the list? Wouldnt it be useful to read a refresh, an update, a reiteration of the qualities and attributes of value, with new news thrown in, that made the company great, and still great?

Were sure most of our readers hardly expect a list of 100 completely new stocks each year. But you know what? If we published an annual revision that had no new stockszeroall the same as last year, wed think that we had done a heck of a job. Such a good job that the 100 Best were still the 100 Best.

We also know the real world doesnt work that way. The economy changes. Technology changes. Markets change. There are no guarantees that the fortunes of a business in Year One will continue just as strong in Year Two. In fact, you can usually bet against it. Furthermore, were always scanning the business landscape for new ideas, for new companies that might be a better fit. (Remember our cardinal rule of sellingsell when there is something elseeven cashthats better to buy.) We also fine-tune the list for balance so as not to have too many companies in a hot industry, to have companies that complement each other in a portfolio.

We didnt put 12 new stocks on this years 100 Best Stocks list. We added 14. We chucked a few losers we probably should have dropped last year. We got rid of some duplicatesdont need two industrial gas suppliers; dont need two suppliers of dental materials. We trimmed the health-care industry from 17 companies down to 15. And we made some changeswelljust because we saw what we thought were better opportunities. Sell when theres something else better to buy.

With that, welcome to the 100 Best Stocks series, in particular to this 2013 edition of The 100 Best Stocks to Buy.

WARNING: If youve read the 2012 book and its predecessors, youll probably find some of the following familiar.

But here goes, anyway.

Because it is still relevant.

If you bought this book, youre probably an astute and experienced individual investor who invests in individual stocks in individual companies. Now, that might not seem so profound, but with some 10,000 mutual funds, 8,000 hedge funds, and about 1,500 (and rapidly growing) exchange-traded funds (ETFs) out there, its conceivable that the individual stock investor is becoming an endangered species.

But thats just not so. For personal profit as well as for the efficient allocation of capital to businesses and ideas that work best, millions still engage in this sort of pure investing for all or part of their wealth. Yet much of what we hear about in the financial media these days is still about mutual funds, hedge funds, ETFs, and other investment products. Are the media catering to your needs or to the needs of the professional fund manager? One wonders sometimes. Either way, we individual investors do exist, but we tend to exist rather quietly. Anyway, off the soapbox. Even if you buy just a few shares of one company, youre an individual investor. Youre participating actively in the economy, and youre buying your share of the company with hopes of participating in its success. Like a homeowner choosing to take part in the work of owning a home as a do-it-yourselfer youre participating in the individual satisfaction, responsibility, and control that comes with doing it yourself.

If you succeed, you accept the benefits of increased wealth (and reduced fees) along with the satisfaction and sense of accomplishment of doing it yourself. If you fail, true, youll have no one to blame but yourself. But at least it wont be someone else who lost your money for you. Youll pick yourself up, dust yourself off, learn from the mistakes, and go out and do it again.

Every edition of The 100 Best Stocks to Buy is intended to be a core tool for the individual investor. Sure, its hardly the only tool available. Todays explosion of Internet-based investing tools has made this book one of hundreds of choices for acquiring investing information. With the speed of cyberspace, our book will hardly be the most current source. In factwell admit by way of a disclaimerbecause of the typical book publication cycle, were at least six months out of date. If you check our research, youll be able to come up with two to as many as four quarters of more current financial information, news releases, and so forth.

So does the delay built into the publishing cycle make our book a poor information source? Not at all. It works because the companies we choose dont change so much, and because they avoid the temptation to manage short-term, quarter-to-quarter performance. We chose these companies because they have sustainable performance, so who cares if the latest details or news releases are included? In