2-for-1 stock split ideas

It�s time to remind ourselves that the sun will come up tomorrow. And I am just as certain that� the U.S. economy will continue to be a powerful generator of wealth for a long time to come.

Here�s another certainty. Investors who pull out of the stock market because of uncertainty will never find another investment vehicle with the same long-term potential for increasing their wealth.

The U.S. market has gained about 6.5% annualized over the last 50 years. That includes the �lost decades� of the 1970�s and the first ten years of this century.

Add in dividends and you�re close to the 10% return commonly cited as the historic return for equities over the very long term. Bonds, real estate, gold, you name it - none have done as well as the stock market.

I don�t mean to imply one should avoid these other investments. Diversification is a good thing.
However, if your goal is to increase your net worth, a significant portion of your invested portfolio must be it the stock market. This is a certainty.

Meanwhile, we continue our strategy of selecting one stock each month for our model portfolio from among those companies that have announced 2-for-1 stock splits.

One company that did announce a split in August was Pharmasset (VRUS).

The stock is hot right now because of very promising results in a Phase 2 clinical trial for its Hepatitis-C therapy. The stock has gone up over 400% in the last twelve months.

However, this company has no earnings and sells at 33 times book value. VRUS could be a spectacularly successful speculative play, but given our conservative focus, I can�t recommend it for a retirement account.

With no splits announced in August among companies that measure up to what it takes for inclusion in our portfolio, we are going back to the previous month's list of splits.

Clearwater Paper (CLW), which produces paper products sold under various private label brands, and is a major supplier to big box stores and supermarkets, was our #2 ranked stock in last month�s rankings.

At that time, we noted that the company's fundamentals were strong for such a capital-intensive industry and that CLW would be considered a solid if not exciting prospect for the next few years.

However, in the current market environment, �solid� is just what we�re looking for. CLW does not pay a dividend, which is disappointing, but in all other respects, this is our kind of company.

Earnings have gone through a slump but are improving and, based on the Board�s declaration of a 2 for 1 split, our optimism for the future seems justified.