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I don't write articles advocating the specific purchase of stocks too often, mostly because trying to time the market is very difficult. Nevertheless, a year ago, I wrote an article titled "Five Blue Chip Stocks To Buy Right Now" that recommended the purchase of five stocks. The five companies that I recommended buying were the following: Berkshire Hathaway (NYSE:BRK.A), Pepsi (NYSE:PEP), General Electric (NYSE:GE), Wells Fargo (NYSE:WFC), and Exxon Mobil (NYSE:XOM). Now that a year has passed, I thought it would be appropriate to review the performance of my picks relative to the stock market at large so I can be held accountable for my recommendations, as well as indicate what I consider to be a wise course of action going forward.

For those of you who want to double-check or verify the data I provide in evaluating my performance, I used the website longrundata.com and entered September 7, 2011 as my starting date and September 7, 2012 as my closing date.

As a benchmark for comparison, I'll use the S&P 500 (NYSEARCA:SPY) as a reference point. From September 7, 2011 to September 7, 2012, the S&P 500 offered a total return of 22.46%.

My first pick, Berkshire Hathaway, returned 22.48% over the past year, essentially in line with the S&P 500 at large. Pepsi, meanwhile, returned 20.69% over the past year, slightly below the performance of the S&P 500. General Electric, meanwhile, proved to be a winner, as it returned 41.62% over the past 12 months. Wells Fargo has also done quite well, too, having delivered a 43.18% return to shareholders over the past year. While not as good as GE and Wells Fargo, Exxon Mobil did quite well in the past year, posting a total return of 25.07%.

If you had put an equal amount of money into each of the five companies that I recommended, the total return would have been 30.61% in comparison to the total return of 22.46% offered by the market, for a performance of eight percentage points above the S&P 500.

The general currents of the S&P 500 at large can possibly explain the general rise in share price of Berkshire Hathaway, Pepsi, and Exxon Mobil over the past 12 months, which have offered investors gains commensurate with the S&P 500 at large.

The two picks that performed particularly well over the past 12 months, General Electric and Wells Fargo, have outpaced the S&P 500 by a significant margin, possibly due to strong earnings growth and increased market faith in the earnings quality of these two firms. GE is on pace to earn $1.55 this year relative to $1.31 last year, and Value Line estimates earnings growth of 15.0% annually going forward through 2015-2017. Likewise, Wells Fargo is on pace to earn $0.88 per share in 2012 relative to $0.48 in 2011, and Value Line estimates earnings growth of 14.0% annually to 2015-2017 going forward. Some combination of year-over-year earnings growth, more faith in current earnings quality, and a bright five-year outlook can likely explain the stellar returns of GE and Wells Fargo over the past 12 months.

One of the reasons why I wanted to write this post is because I wanted to alert those following my picks that I am no longer recommending these five stocks as buys today. Is it because I think they are bad companies? Heck no. Each of the five listed above are leaders in their respective industries, and have been the types of companies that deliver good returns for investors that historically have chosen to hold them for long periods of time.

But their run-ups in price have changed the calculus of making an initial investment at this time. There are two things that an investor can do to find safety in an investment: he can purchase an excellent company like Coca-Cola (NYSE:KO), and he can purchase stocks at a price less than intrinsic value. As Irving Kahn -- the legendary investor who is famous both for being the oldest broker on Wall Street (he is 106) and for being an early investor in Berkshire Hathaway -- once said: "If you buy your stocks cheap enough, they'll learn to watch themselves."

It is on this latter element that I would no longer advocate buying the five companies I list above at the present prices. A year ago, they offered safety in two forms: they were high quality businesses and they were selling cheap. That is no longer the case. Now, they are high-quality businesses that are selling within the vicinity of what they are worth. Owning any of them is not a bad thing, it's just that the investment thesis has now become this: "The growth of the company going forward will roughly approximate the returns enjoyed by investors." A year ago, the investment thesis was this: "Investors have two sources of potential gains on these companies: They can enjoy the growth of the business, plus the valuation tailwind as the stock price rises to fully reflect the value of these companies." I don't think that is still the case today.

While the businesses continue to be outstanding, the valuation of these firms is not equally compelling. That's why I would no longer recommend that investors purchase these five stocks at the prevailing market prices -- the returns going forward are likely to be what the business earns because the margin of safety found in the price has disappeared.

Source: One Year Later: A Change In My 5 Blue-Chip Stock Recommendations