How Have Our Ideas Week Picks Performed?

Before we kick off Ideas Week on Monday, we thought we'd take a quick step back and look at how some of our best ideas from the end of 2009 have played out during the ensuing year.

Here are three picks that have worked out very well, two that haven't been as successful, and three where the jury is still out.

What We Got Right
 iShares MSCI South Korea Index (EWY)
Morningstar director of ETF analysis Scott Burns recommended that investors take a look at this South Korea stock ETF. He saw that Korean stocks had trailed the rest of the world in the rebound but that the domestic economy was still sound. Korean consumers were in good shape, and the country was accelerating its exports to the fast-growing Chinese markets. Although South Korea's recent geopolitical conflict with its northern neighbor have elevated investors' fears, the ETF is up more than 22% in the last year, far outpacing the S&P 500's 12% returns.

 PACCAR (PCAR)
Our stocks team pitched truck maker PACCAR as a way to play the then nascent recovery in the shipping and logistics industry. The stock was hammered in 2008 and only modestly recovered in 2009 as truck purchases fell in the face of the global recession. Our team believed that sales were unsustainably low and that the firm would see significant tailwinds in the coming years as truck purchases ticked up. The last year proved them right. The firm's results got steadily better, and the stock soared to a return of more than 50%.

 Sequoia (SEQUX)
Morningstar fund analysts Mike Breen and David Kathman both suggested that investors looking for a good core holding should seriously consider Sequoia. They were (and still are) impressed with the fund's commitment to buying cheap stocks that have long-term competitive advantages and strong balance sheets. Manager Bob Goldfarb also isn't afraid to hold cash if he doesn't see value in the marketplace. This prudent approach paid off in 2010 with the fund rising almost 19% in the last 12 months, well ahead of the S&P 500 and its category average.

What We Got Wrong
 CBS (CBS)
We cautioned investors against picking up shares of media giant CBS. We were worried that slow advertising sales, a general decline in network TV viewership, and disruptive technologies would permanently weigh on CBS' fortunes. However, in the last year the ad market has been much better than expected, and shares have surged 35%. And though we believe CBS will continue to struggle to achieve long-term revenue growth, we believe the shares now look reasonably priced.

Inflation
In his economic outlook for 2010, Morningstar's Bob Johnson thought we may very well see higher-than-expected inflation, possibly above 3%. His reasoning was that even though there was a lot of underutilization in some areas (like in autos or construction), other sectors, such as tech, were running closer to full capacity. As full-capacity sectors began competing more for resources, the general price level would begin to rise. A year later we know that inflation has not reared its head yet, and in fact many are still worried about deflation. Rising price levels will likely be a fact again, but inflation turned out to be a nonfactor for 2010.

Too Soon to Tell
 Abbott Laboratories (ABT)
We selected Abbott Labs as a pick for 2010 because of its 3% dividend yield and double-digit long-term growth rate. However Abbott's year didn't turn out exactly as we had expected. Investors became worried that the firm's autoimmune agent, Humira, would face increasing competition. Humira is an important contributor to the bottom line, so a huge fall of in sales would be challenging for Abbott. Coupled with other concerns about the firm's pipeline, shares fell 12% during the last year.

But we think that these fears are overblown. The firm has a strong stable of existing products and limited exposure to expiring patents. We still believe the firm is a buy today.

Utility Stocks
Burns and Morningstar DividendInvestor editor Josh Peters both recommend utility stocks as a sector that investors might want to consider. Performance of utility stocks during the last year has been far from impressive. Of all sectors, it has had the lowest return during the last year gaining only 3.2%. But that doesn't mean that an investment in utilities won't pay off. One of the best features of the sector is its above-average dividend yields. It takes a long time for the compounding effects of these yields to be seen in returns. As such, 10 years from now investors may still be quite happy with their total return even if the price return was anemic in 2010.

For-Profit Education
At the onset of 2010, we were well aware of some of the potential regulatory issues that for-profit universities would face in the coming year. Still, we believed that this industry's very profitable business model could overcome any new rules. However, some of the Department of Education's proposed new rules were much stricter than the market had expected. The sector has sold off significantly with stalwarts such as  Apollo Group  and  Strayer (STRA) falling by more than 25%. Although we've trimmed our forecasts for the schools as a result the regulatory changes, we still think they are capable of producing good returns for the long haul.