Market commentary

With reporting season over, and armed with the Value.able mantra, how are you uncovering the very best stocks worthy of your attention?

Lifebuoy soap was once marketed as Floating Above the Rest. Are there any companies post reporting season doing the same?

While many of my peers believe 2012 could be a very difficult year for investors, there are currently a selection of companies that appear to be both high quality and trading at prices offering a rational safety margin compared to our estimates of their intrinsic value.

Each reporting season we present a short-list of companies worthy of careful analysis. This reporting season is no different. As always, the list is not exhaustive. You are free to agree, disagree or append the list. Indeed, I encourage you to do so. For debate often brings A1 ideas.

I decided to look for Large Caps, Mid Caps, Small Caps, Micro Caps and Nano Caps with an A1 or A2 Quality Score across all sectors and industry groups.

I’m also interested in companies for which there are analyst forecasts for at least one year ahead and whose current market price offers a safety margin of more than 10 per cent.

From over 2080 listed companies, 17 meet the criteria.

An attractive and sustainable Return on Equity is also important, so let’s seek out companies whose ROE is greater than 20 per cent in the most recent financial year, have a forecast dividend yield of more than four per cent and whose intrinsic value that is forecast to rise at least six per cent per annum.

The result?

Nine companies trading at a discount to intrinsic value that may be worthy of your attention.

Here they are: Seymour Whyte (ASX:SWL), Nick Scali (NCK), Codan (CDA), M2 Telecommunications (MTU), Credit Corp (CCP), Global Construction Services (GCS), Breville Group (BBG), GR Engineering (GNG) and Flight Centre (FLT).

If we were in a bull market, I suspect a stampede to get ‘set’ may ensue, without proper research. With the luxury of a market where the tide may still be going out, you may just have the indulgence of time to conduct plenty of research. Regardless, independent research is essential. As is seeking personal, professional financial advice.

So, what have you been researching? Go ahead and list your “Top 5”. We’ll put together a worthy riposte.

Alternatively, put forward your A1 suggestions and we’ll compile a list of intrinsic valuations and Skaffold® Quality Ratings for the next blog post.

Finally, keep in mind that I cannot predict where the share prices for these companies are headed. They could all halve, or worse. And remember, seek and take personal professional advice.

Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 stock market service, 8 September 2011.

by Roger Montgomery Posted in Companies, Market commentary.

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Now on the cusp of reporting season, it is worth reviewing our expectations for Value.able intrinsic valuations and double-checking those that belong to higher quality (MQR: A1, A2, B1, B2) businesses.

There were more than 107 suggestions! Thank you.

Our new A1 service allows us to whip up all the data required for all your nominated stocks in less than a minute (soon you can too!). For now, let’s put stakes in the ground for those which achieved at least three nominations.

In order of mentions…

Matrix C&E, followed by JB Hi-Fi, Forge, Vocus, BigAir, Credit Corp, Woolworths, Thinksmart, BHP, M2 Telecommunications, Zicom, Oroton, ANZ, CSL, ARB Corporation, Thorn Group and Cash Convertors. The remaining companies received less than 5 mentions each. The companies with only a single mention (and therefore arguably least followed) were: ILU, RFG, SMX, KRS, AMA, LNC, RQL, COU, TBR, CPB, AVM, BDR, REA, AIR, CKL, AJJ, FXL, CTD, STU, MIN, TGR, CXS, CMI, CDA, CGX, DGX, RCO, MND, CIX, MOC, RHD, DLX, RMS, MYE, SEA, DPG, SFR, NCK, SRX, NCM, CLV, NFK, CLX, NOE, CMG, NST, IPP, CDD, WTF, OGC, KNH, DWS, FRI and KCN.

Well without further delay, here’s the list with our 2012 forecast Value.able intrinsic valuations.

<Temporarily removed for updating and additional stocks and data columns>

Over the next few weeks we will build on the list, include some additional useful information and data and generally prepare you for reporting season.

Stay tuned. This is a period when even developed markets can be inefficient.

Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 1 July 2011.

by Roger Montgomery Posted in Companies, Market commentary.

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As more Australian companies start to pile up cash, the mergers and acquisitions buzz is sure to heat up. Roger Montgomery believes that less flashy share buybacks and dividend initiatives are often a better bet for increased shareholder returns and nominates some of his favourite A1 businesses. Read article.

by Roger Montgomery Posted in In the Press, Market commentary.

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Peter Switzer asked Roger Montgomery to reveal six of his cheapest A1 stocks. In Roger’s A1 list are three retail businesses, a supplier of oil well equipment, an auto part manufacturer and another that services the casino and gambling industry. Which business is Roger Montgomery’s hot A1 pick for 2011? Watch the interview.

by Roger Montgomery Posted in Market commentary, TV Appearances.

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In late 2010 Peter Switzer set Roger Montgomery a challenge – create a portfolio of A1 businesses that will outperform the market. Whilst Roger does not trade short-term, on Thursday 10 February 2011 he revealed the results of his A1 portfolio. Of the 10 A1 businesses Roger named, the share prices of two rose 25 per cent, another two rose 12 per cent and the remainder returned an average of seven per cent. That’s an average share price appreciation of around 10 per cent in just six weeks! The All Ords returned 5.7 per cent over the same period. Even Roger’s A1 businesses that were trading at prices higher than his Value.able intrinsic value returned an average of 10.5 per cent. It just goes to show that Roger’s Value.able method of valuing only the best stocks, his A1s, and buying them for less than they’re worth, can beat the market. In this interview Roger also shared his thoughts on Telstra following the company’s recent results announcement. Watch the interview.

by Roger Montgomery Posted in Market commentary, TV Appearances.

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In an urgent world that drives you to act constantly value investing seems boring or even slothful, but it is precisely this single minded focus  on the best businesses that will almost always improve your investment returns. Read article.

by Roger Montgomery Posted in Investing Education, Market commentary.

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• POSTED IN Investing Education, Market commentary