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Four high quality companies

15012019_4 quality companies

Four high quality companies

When it comes to stocks the term ‘quality’ has many definitions. Some investors adopt a flexible approach to the definition of quality including being satisfied if quality management is running the business, a quality customer base exists, or they can identify quality assets on the balance sheet.

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Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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16 Comments

  1. The Share Market is a corrupt place where all the best salespersons, scammers, schemers try to get you to put your money.
    You are better off putting your money into a well researched property and going on the pension that both Liberal and Labor have continued to degrade by lowering Asset thresholds and removing Franking Credits!
    Rogers “Valuable” is one of many tools you can use but even it can’t be right all the time.
    The only person to believe is yourself as the banking commission has proved any one in or associated with finance cannot be trusted with your hard earnt
    We should have a Royal commission on all participants in the Stock Exchange!

    • Thanks Kent,

      That’s pretty pessimistic view. I suspect most would aspire to something better than the pension, and it is absolutely possible through compounding returns. You can’t rush it though so it helps to start yesterday. As someone wise once observed, someone today is sitting in the shade because someone a long time ago planted a tree.

  2. Hi Roger
    There are rumours around that the biggest spenders ar ARB are the lucky baby boomers and as they die out, so will the ARB sales momentum. Millennials prefer other holiday options and what about the future predicted death of Dieselpowered car manufacturing? Big European manufacturers are already making exit plans for diesel models with electric vehicles the knockout punch

    • Armageddon scenarios come and go more frequently than ARB customers Rick! When I vist caravan parks around the country, I don’t see any shortage of young Aussies who will be keen travellers doing the ‘Lap-of-Honour’ when they retire too.

  3. Dear Roger

    Previously you have been a strong support of Challenger Financial Group (CFG)

    I bought CFC at $9.50 about 2 months ago.

    As you would be aware they have fallen to around $7.50.

    Can you please give me your thoughts on this stock in the short and long term.

    • We reduced our positions ahead of the recent weakness but remain an investor and are currently reassessing its prospects and value. We will let you know our latest thoughts when they have coalesced and when we are able.

  4. Why is ARB a good buy in comparison to a 3% short-term deposit? Its ROE is > 20% but you’re paying P/B of > 4.

    When you’re investing in a short-term deposit, you are essentially paying a P/B of 1. So how is ARB a good buy in comparison to a short-term deposit?

  5. Hi Roger, thanks for the article. I’m very interested in Reece plumbing however I do have some queries around the housing industry downturn in Australia and what affect this may have on the company? Is it at maturity in the life cycle stage or do you expect it to grow with the population growth?

    • Hi Chris,

      many thought Reece was mature a decade ago, and here we are. Given the size of the company it could continue to grow faster than the population for many many years. Of course it will be exposed to business, economic and property cycles but these are all temporary.

  6. Just a little curious. The Montgomery fund has WBC and NAB in their top 10 holdings. ANZ gets a mention here and not the above mentioned. Are all the banks an opportunity in your view? I have never seen or heard such polarised views on the banks in a very long time.

  7. Great report, thank you for the information
    Reece a company I will add to my portfolio next month.

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