mardi 17 octobre 2017

The ultimate list of growing cash flow generators

As you probably know by now, I'm always looking for the easiest recipe to apply to select great stocks.

To do that, I often analyze stocks on various angles to find out what's so great about them. Some people, like my girlfriend, would call me an autist for doing that. I don't think I am an autist, but she seems to find comfort in that belief to help her to accept the fact that I'm not entirely how she would like me to be.  For instance, the other night, she called me an autist for knowing the year of birth of Morgan Freeman. I don't think that it's an autist trait to know that. Actually, I think that's the poeple who don't know that important fact that are dumb.

Well, thanks to autism, I've made a very special list for you, once again. The group below is a VIP group of stocks, very hard to find, which are what I call "Class A" stocks. These stocks had all growing free cash flows over the last 5 years. I've written a bit about that kind of stocks lately, but they're very special stocks. They're true value creators, which is something rare. 

Constellation Software (CSU)
Enghouse Systems (ENGH.TO)
CCL Industries (CCL-B.TO)
Boyd Group (BYD-UN.TO)
Alimentation Couche-Tard (ATD-B.TO)
Canadian Pacific (CP.TO)
Canadien National (CNR.TO)
Disney (DIS)
Credit Acceptance Corp (CACC)
Middleby (MIDD)
Priceline (PCLN)
Novo Nordisk (NVO)
Robert Half (RHI)
Liberty Global (LBTYK)
Home Depot (HD)
Facebook (FB)
Roper Industries (ROP)
Owens-Corning (OC)
American Tower Corp. (AMT)
Waters (WAT)
Discover Financia Servicesl (DFS)

Average return last 5 years: 210%
Average return last 10 years: 694%

The average current ROE of the group is 32
The average forward PE of the group is 20,5
The forward PE of the group divided byt the average PE of the last 5 years of the group is 0,84, which means that this group is cheaper today than on average for the last 5 years

And now, compare the performance of the group VS the performance of the S&P:

S&P return last 5 years: 75%
S&P return last 10 years: 66%

If you'd seen the individual returns, you'd be even more shocked. Could you believe that, over the 20 stocks listed above, only 3 did worse than the S&P over a 5 years time frame? These stocks were Liberty Global (16%), Novo Nordisk (42%) and Discover Financial Services (60%).

Over a 10 years time frame, only two stocks did worse than the S&P. These stocks were Liberty Global (37%) and Robert Half (59%). And probably that Liberty Global had some accounting tricks over the period, like doing some spinoff generating value (which isn't something we can see on a chart).

So, over a 10 years time frame, you'd have 90% of your stocks that would have done better than the S&P? Isn't it fucking incredible? That group may look expensive (some current PE ratios are high), but most of these stocks have always been pricey. We should take a look at them on an historical (relative) perspective, not on an absolute perspective.

You should be eternally thankful to me for giving you such a list, you fucking ingrate readers. You give me nothing but statistics and I give you the recipe to become rich. I should keep all that for myself  because we have a fucking one-way relationship. I give, you take. You give me nothing, I take it. And so on and so on. And I don't mind, because I'm a fucking autist and I don't realize when people are wiping their feet on me.

6 commentaires:

  1. Actually Penetrator, quantum physics has long since proved what the mystics have been telling us for years…that we as individuals create our own reality. In other words Penetrator, we are all co-creators…you are creating each of us as we are all creating you, so actually we are all in a symbiotic relationship…just saying…

    1. Gavin, with some weed, these thoughts would make me fly.

  2. For those of you that feel the need to give something back. Here's the top 12 toys to give to autistic kids and teens (Penetrator is a kid at heart):

    His life will get so much more exciting when one of you gifts him a FLOWING SAND PANEL, a fidget set, or tranquil turtle and frog.

    1. Thank you for that link. I feel my life will change.

    2. You forgot an important cash flow generator from your list. This company called Concordia. It was down about 40% Friday and trades for 72 cents (canadian). Donville said they generate huge amounts of cash flow. He was saying this when the stock was $50. I can imagine how huge their cash flow generation is today.

    3. I can't believe at one point I had over 10% of my money in Concordia. Gave back all my gains and took a $1500 hit before I had enough and clued in.

      I think Donville will always be remembered for his Market Call "Healthcare Stock Special" episode where he firmly defended Concordia, Nobilis, Valeant, and I'm sure PHM. I can only imagine the number of phone calls and emails he later got on those stock picks.