dimanche 26 janvier 2020

Some screeening to help the masses

A lot of people, including myself, have said numerous times that the market was expensive, but now,  I see almost nothing that's worth buying. What's worrying me is that I see a lot of people talking about buying stocks that are selling for 40-50 times their earnings. It seems more and more normal to pay that kind of price. 

Apple for 26 times earnings (21 times next year's earnings) with an estimated growth of 9% per year? What the fuck? It's not a normal price. 

But sometimes, impressions are not completely true. In these times, you should screen the market.

That's what I just did, via Value Line. And without any particular deep analysis, here's a list of 10 stocks that are highly predictable, that have grown their EPS by 12% over the last 5 years and are planned to grow their EPS by at least 12% for the next 5 years. Finally, all of them are selling for 24 times their current earnings or less.

Alimentation Couche-Tard
Booking Holdings
Canadian Pacific
Genpact Limited
Charles Schwab
Ulta Beauty

My favorite in that list being probably Genpact and Couche-Tard. 

3 commentaires:

  1. PE is not helpful on its own. I'll gladly pay a 30x for a company with a 25% ROIC growing top line at 8% and net profits at 15%. That's a heck of a better buy than many low PE stocks on capital intensive or bad economic industries

  2. Any opinion on CGI (GIB.A) after this weeks correction?

    I am a little tempted to sell BHC (56% loss) and CMG (23% loss)in my RRSP to buy CGI as my only holding in this account... I already have about 1/2 loss because of Concordia and Valeant so I have written the account off as it is. It is worth too little to hold a more meaningful position in more than one position, so I was thinking to put it all on BAM, CSU, or GIB and just forget about it for many years. I do not plan to add any more money since I still have not used up my TFSA room and am in the lowest tax bracket. I like that unlike the other two, CGI does not pay dividend so I will not have told $500+ in a cash/mutual fund to be able use the dividend for something that pays some interest (since it is a registered account and little dribbles of money cannot be withdrawn for other purposes).

    CGI is trading at under 20x PE and about 16.5 P/CF with 17.7% ROE at the moment with probably a long a runway in consolidating IT services around the world. BHC still has relatively lot of debt which is like a prisoner's ball on its leg since it is preventing any meaningful M&A and CMG is not growing beyond abysmal organic growth.

    I guess this brings up an interesting question... if you had to own just one stock for the next 40 years, what would it be? Ideally, it should pay no dividend and be USD or CAD listed and have share price under 5k/share.

  3. It's good. Better imo are: Intuit, paypal, estee Lauder, stryker.

    At today's prices I like EL. Bought some more yesterday. All long term holds