Media Room

In this appearance on Your Money Your Call, Roger Montgomery answers viewer questions on McMillan Shakespeare (ASX:MMS),  Ansell (ASX:ANN) Think Smart (ASX:TSM), Thorn Group (ASX:TGA), GR Engineering (ASX:GNG) and Technology One (ASX:TNE). Roger also reveals which gold stock continues to attract his Value.able eye? Watch the interview.

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Your teenager wants to invest in the stock market. They have $6000 sitting in an ‘advantage saver’. What should they do? Roger Montgomery suggests this young investor seek out businesses with high rates of return on equity, little or no debt and bright prospects. The final step is to ensure shares in such businesses are acquired at prices less than they’re worth. In this interview Roger also shares his suggested portfolio allocation strategy to minimise risk for this young investor and reveals why he was pleased by Credit Corps (ASX:CCP) full-year results. Watch the interview.

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In this appearance on Your Money Your Call, Roger Montgomery reveals nine extraordinary businesses he recently acquired for The Montgomery [Private] Fund. Roger urges investors not to be fearful of market downturns, but rather embrace the opportunity to acquire extraordinary A1 businesses for prices less than they’re worth. Roger also answers viewers’ questions on Forge (ASX:FGE), Macmahon Holdings (ASX:MAH) and Decmil (ASX:DCG) – whose intrinsic value is forecast to rise to above $8 by 2013? Watch the interview.

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If anyone were to make a second run at Qantas, now would be the time to do it. Read Roger’s article at www.eurekareport.com.au.

by Roger Montgomery Posted in Media Room, On the Internet.

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Following the release of their full year results, Roger spoke with senior management at JB Hi-Fi and discussed their cashflow and working capital.

JB Hi-Fi scores an A3 (down from A1) thanks to a debt-funded buy back of shares. It is nonetheless a company with great cash flow. Value.able Graduates paying close attention to Cashflow in JBH’s latest result may have been concerned by the large jump in inventory, which had a detrimental impact on Cashflow from Operations since last year.

So, what did Roger discover?

In 2010 JBH stores were cycling low inventory numbers. Arguably this resulted in a sell-out of stock, which was due to under-provisioning,

Stepping back and looking over time at a pre-store level, Roger says “If you have a look at the inventory on a per store basis, $2.2m – $2.6m per year, it’s fairly consistent. I’m not concerned.”

Roger suggests the future is interesting for JB Hi-Fi. If store growth continues at the current rate (13-16 stores per year) for the next three to four years, then by the time they reach 214 stores, there will be a lot of free cash. Extra cash from the maturity of existing stores, combined with a reduction in debt, will see a very cash rich JBH.

What will management do with the extra cash?

In Roger’s view, management have three options: increase dividends, buy back more shares or make a [silly] acquisition.

Roger’s estimate of JBH’s Value.able intrinsic value in 2012 is around $17, rising to $20 by 2013.

Will intrinsic value continue to rise after that?

“That will be largely dependent on what management does with that cashflow when it’s freed up” Says Roger, noting; “I think the future for JB Hi-Fi will prove to be a didactic experience for value investors.”

Value.able Graduates: What are your insights on Australia’s embattled retailers?

Value.able TV #4 was recorded at Montgomery HQ on 15 August 2011.

Posted by Roger Montgomery’s A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 15 August 2011.

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The Dow Jones dropped 500 points. The ASX immediately followed. Is this rational investing or just another correction? In this appearance on Switzer TV with Peter Switzer, Roger Montgomery reveals eight extraordinary A1 companies whose shares are trading at prices below his estimate of their Value.able intrinsic value. Roger reveals Flight Centre (ASX:FLT), Data#3 (ASX:DTL), Oroton (ASX:ORL) and Cash Converters (ASX:CCV). What other extraordinary businesses make Roger Montgomery’s A1 grade? Watch the interview.

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There’s an odd whiff about the upcoming float of Australia’s top-selling cheese brand. No matter what the company says, investors will have their shares diluted by Bega’s acquisition of Tatura Milk Industries. Read Roger’s article at www.eurekareport.com.au.

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The Australian share market and dollar have staged spectacular turnarounds, with All ordinaries index rising phoenix-like from falls of more than 5 per cent to finish with a 1 per cent gain. Fund Manager, Roger Montgomery reveals his thoughts following the market turnaround. Read the article.

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In light of the market downturn, Roger Montgomery is finding bargains in extraordinary companies that are trading at discounts to their intrinsic values. In this interview with Ross Greenwood, Roger shares his thoughts on Macquarie Bank (MQG) and Zicom (ASX:ZGL). Roger also reveals which A1 and A2 MQR (Montgomery quality rating) companies are trading at discounts to their intrinsic values. Listen to the podcast.

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It’s a common question. Stockbroker recommendations often travel from ‘Buy’ to ‘Hold’ then back to ‘Buy’, and then all of a sudden ‘Ceasing Coverage’ appears. Rarely is a ‘Sell’ mentioned, let alone maintained for any length of time.

So the question remains… should you sell after the stock market has fallen 511 points? Or when the share price of an extraordinary A1 business falls by as much as 26 per cent?

“Of course not, Roger!”, I hear Value.able Graduates shouting from the rooftops across the country.

In Chapter 13 of Value.able I describe my five rules for when to sell. In this video, I will elaborate on Rule # 1: No junk policy.

I will assume 1. You are a Value.able Graduate, 2. You have changed some part of the way you think about the stock market. I will also assume you can confidently pick an A1 company from a basket of so-called ‘blue chips’.

Your mission:  Go through your portfolio. Turn the stock market off and look at the businesses you own. Are you blessed with A1s? Or is your portfolio full of ‘blue chips’ that fail to make the A1 grade?

If you are yet to join the Graduate Class, click here to order your copy of Value.able immediately. Once you have 1. read Value.able and 2. changed some part of the way you think about the stock market, my team and I will be delighted to officially welcome you as a Graduate of the Class of 2011 (and invite you to become a founding member of our soon-to-be-released next-generation A1 service).

Value.able TV #3 was recorded at Montgomery HQ on 5 August 2011.

Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 9 August 2011.

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