Here’s a an update on some key holdings in the Buy and Hold portfolio.

The rising tide over the last year has made investments with reasonable valuations scarce. I have no way of knowing for sure, but I believe one exception is Exelon Corp (EXC), which has a price-to-earnings ratio of about 15. In addition to being reasonably valued, this company has a strong position within the utilities sector and a solid balance sheet. A recent dividend cut has put some downward pressure on share prices.

Furthermore, cheap natural gas and other sources of energy have limited the upside potential for the nuclear portion of Exelon’s energy portfolio. Additional headwinds for this company have been created by the stringent regulatory environment for nuclear power.

That said, the company in my opinion has one of the strongest positions in the nuclear power market. With a long term view in mind, these recent and temporary problems for the company have created a buying opportunity. While the external market forces may continue to have a negative impact on Exelon’s earnings, and hold down share prices for an unknown period, there may come a day when these negatives are either erased or at least limited.

Until the day comes when market forces swing in Exelon’s favor, I’m perfectly happy holding a company with a 15% average ROE over the last 5 years, positive earnings and  4%+ dividend yield while waiting.

In my opinion, all indications point toward Telecom Argentina (TEO) being a solid value buy. With a price to earnings ratio slightly over 6 and being priced just over book value, there seems to be limited downside at these levels.

While TEO’s current PE ratio is near its historical average, the price-to-book ratio is well below the 10 year average for this company. The valuations are also well below the averages for the telecom industry and general market.  Much of the reason for TEO’s lowered valuations stems from the political and market risk in Argentina.

Those are factors that could greatly impede the long term success of this company or in the short term put further pressure on share prices. Furthermore, there is a risk that the rather sizeable dividend could be cut should the government strongly suggest (as they have done) that the excess earnings be reinvested into infrastructure.

While those risk factors could prove detrimental, much of that downside appears to already be priced into this stock. As is always my preference, this company has very solid fundamentals to support business operations if economic, political, or other conditions should worsen.

At the time of this writing, TEO has a solid track record for growth, minimal debt, and a solid enough current asset position to cover the cost of operations as needed.

Then there is Total (TOT). While this is one of the least compelling purchases by my portfolio recently, it seems to undervalued (if only slightly) in a generally rising market that has limited value opportunities.

The quick summary is that the fundamentals make current valuations make for a reasonable (if not exceptional) purchase at present prices. The five-year ROE has been around 18% while employing a reasonable amount of debt.

Earnings and dividends have been growing, if only modestly, over the past 10 years. Finally, current valuation ratios are near or slightly below company specific averages and even further below industry and market averages.

DISCLAIMER: The investments discussed are held in client accounts as of January 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.