I’m revisiting two stocks I’ve owned before, putting them back into the portfolio today. And I explain why I chose against adding a third name.

I want to diversify the portfolio away from being so tech-centric and add a new Food Revolution name to the portfolio here. Trading With Cody subscribers have seen me asked about $WWAV, White Wave several times over the last few weeks and I have been hard at work researching and analyzing it. White Wave produces and markets and distributes many of the brands that you see in a Whole Foods or any other health-minded grocery store, including the Horizon Organic milk and dairy products, the Silk-branded coconut, almond and other dairy alternatives, and other similar brands.

That sounds like the kind of healthy-eating trend I’m trying to get in front of. But then I started digging into the valuation and balance sheet and that’s when I ran into problems with getting excited about this stock.

The company has little cash and more than $1.5 billion in debt. Revenue growth looks strong with analysts expecting 11% growth this year and next but with earnings expected to grow from $1.16 this $1.39 next year, you’re seeing some big assumptions that the company can deliver margin expansion at the same time.

That $1.39 estimate for next year gives White Wave a forward P/E of 31 but the $1.5 billion debt added to the $7 billion market cap makes the enterprise value to earnings a bit rich at 39. One other note is that the $1.5 billion in debt is equal to 1/3 of next year’s revenue estimate, meaning there’s little leeway for the company’s finances here.

Now compare that to Whole Foods, which I’ve owned before from about these same levels. When I sold it a few weeks ago, I wrote, “Whole Foods has disappointed me and Wall Street for the last couple earnings reports and again, I want to step away from the name so I can analyze the entire sector with a clear mind.” I’ve done that now and I have come back to Whole Foods again and want to put it back in the portfolio.

Whole Foods has almost no debt and almost a billion dollars in net cash.The company’s bar is set lower with analysts expecting 8% revenue growth.  Earnings are expected to grow from $1.67 to $1.77 next year, giving it a forward P/E of about 18. But take that billion dollars back into the equation to get the enterprise value to earnings ratio of about 16. The real kicker is that you also get a 1.5% dividend yield to hold the stock, which beats what I get in a savings account or CD these days.

So I’m adding Whole Food back into my portfolio here today, starting with a 1/3 of a full position-sized tranche. 

I’m also buying back Netflix which, like Whole Foods, I’ve also owned the past. I’ve talked about how Netflix is the epitome of an App Revolution company and how they’ve become a de facto standard for watching TV and movies. Every one you know is either already addicted to several shows on Netflix or is about to become so. Revenues are growing 25% per year or more and its simply one of the fastest growing large caps on the planet. Earnings are minuscule mostly because the company is still investing heavily in growth initiatives.

I interviewed the CEO founder of the company, Reed Hastings, on my old Happy Hour TV show on Fox Business years ago and have met him a few times over the years and have been very impressed with his vision. Netflix is also one of the few tech companies that has a clean subscription revenue model rather than an ad-based revenue model.

I ‘ve long said it can be worth $100 billion or more and I think it’s time I get back long the stock. The company reports earnings on Wednesday after the market close and expectations are very high going into the report. I’ll personally be buying more Netflix if it were to take a hit after report. I’m going to add Netflix back into my portfolio using common stock, starting with a 1/3-sized tranche.