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Yesterday’s Winners
Are Today’s Losers

If you’re not actively trading stocks these days, chances are your performance
is as dull as the overall market — maybe worse.

That’s a problem, because as investors, we tend to get attached to our holdings and hold on far too long. Yet, particularly during a market like
this, yesterday’s winners are often losers today.

We should really think of a stock as a car instead of a friend.

Sure, it was new and shiny once, and the trip was fast. But then the ride gets rough,
and even after repairs are made, it doesn’t run quite as nice. At some point, it’s time to trade it in.

So with an eye toward portfolio diversity, let me propose some trade-in trades designed to help you shed popular stocks now past their prime for
today’s leaders in the same sectors.

NEXT: Starbucks vs. McDonald’s

Sell Starbucks; Buy McDonald’s

This one is easy. The golden arches are giving the coffee club a good, old-fashioned whooping.

McDonald’s (), of course, was always positioned to do well in a weak economy. Its value pricing
is the perfect tonic for distressed budgets. But now McDonald’s is leveling Starbucks () with
a frontal assault on the premium coffee business.

In the works for years, MCD’s idea of premium coffee at reduced prices was laughed at by the coffee snobs. But they’re not laughing anymore. A quality
product at a lower price has hit Starbucks where it hurts.

Sure, Starbucks has had its own problems stemming from growing too fast and opening too many locations, but the attack from McDonald’s has hurt
its performance. Starbucks foray into food has yet to pay any dividends, and I doubt it ever will.

McDonald’s is the stock to own, and Starbucks is the stock to sell.

NEXT: Target vs. Wal-Mart

Sell Target; Buy Wal-Mart

Like McDonald’s, Wal-Mart () was set up to thrive during a weak economy.

Despite intense competition
with rival Target (), Wal-Mart had resisted the trend to move its offerings more upscale. During
great times, this move was questionable. Today, that’s not the case. (See also: Don’t
Discount Wal-Mart Just Yet.)

Low prices are driving more and more customers to Wal-Mart at the expense of Target. And there’s more at work than just a low-price strategy; not
all discounters are doing well, as evidenced by same-store sale weakness shown recently in Costco (). (More
on COST here.)

Wal-Mart is stealing market share as it attracts customers who shunned it not so long ago. It’s now making plans to keep those new customers when
the economy turns. One example: Long known as an anti-labor firm, Wal-Mart is now supporting reform to give all workers health care.

Wal-Mart is the leader in this space. Sell TGT and buy WMT.

NEXT: Citigroup vs. Goldman Sachs

Sell Citigroup; Buy Goldman

Say what you will about the relationship, it didn’t hurt Goldman Sachs () to have its former CEO
as Treasury chief when the financial sector neared meltdown last fall. In the middle of the credit crisis, Hank Paulson’s plans ensured Goldman survived
the mess and thrived afterword. Sorry, Lehman and Bear Stearns.

And Goldman Sachs has greatly benefitted from their demise. There is less competition for trading and underwriting opportunities, and it shows on
Goldman’s bottom line. In its most recent earnings report, Goldman greatly exceeded expectations.

Citigroup () has not been so fortunate. Certainly, the Treasury helped it survive as well,
and the government has basically said it won’t be allowed to fail, but Citigroup remains a mess.

Goldman is the stock to own.

NEXT: Toyota vs. General Motors

Ignore GM; Buy Toyota

No need to trade up with respect to General Motors. The bankruptcy filing left common shareholders holding an empty bag.

At some point there
will likely be a new General Motors stock, but I wouldn’t give the company a second chance.

Toyota (), on the other hand, is benefiting from the demise of Detroit. The popularity of its hybrid
vehicle, the Prius, combined with an advantageous cost structure, left the Big 3 domestic automakers in the dust a long time ago.

So dump your old GM shares if you can find a buyer, and ignore any new version. Buy Toyota instead.

NEXT: Morton’s vs. Bob Evans Farms

Sell Morton’s; Buy Bob Evans

Having been born and raised in the Midwest, I am a big fan of red meat. I love steakhouses, and there are many for me to choose from in my hometown
of Minneapolis.

Or, I should say, there were plenty of choices. Like most towns, the economic boom saw the opening of many high-end steakhouses. The crash
has left those restaurants empty. Earlier this month I learned that one of my favorite joints, the local branch of Morton’s, (),
was closing. I knew things were bad, but not that bad.

Obviously, consumers are trading down for family-style restaurants like Bob Evans Farms ().
It’s not that people will no longer eat out. They will still do so, but on a budget.

Investors need to take note of this trend, as stocks like Morton’s
will likely lag the market while Bob Evans is likely to outperform. Mind you, fine dining will probably come back long before GM. But with the economy expected to be slow for some time, I’d rather own Bob Evans than
Morton’s for the foreseeable future.

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