ValueLine: Better than blue-chips
Looking for top-quality stocks? Ignore the ‘blue-chips’ and start with Roger Montgomery’s list of A1 businesses – those with enduring quality as evaluated by the Montgomery Quality Rating. Read Roger’s article at www.eurekareport.com.au.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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.
Greg Mc
:
G’day Roger,
Interested to see CCP on the list. Did it just happen to tick the financial boxes to make A2 status without taking other considerations into account? Sure, just because it’s on the list doesn’t mean that you personally will go out and buy it but I’m not sure that CCP is a company that I would expect to see on any list described as ‘better than blue chips’.
Roger Montgomery
:
Hi Greg Mc,
The lists are just numbers and as I have said many times before the A1s and A2s represent very low probability of going bust. You then need to be satisfied about the future direction of intrinsic value and compare the price to intrinsic value too.
SImon
:
Hi Roger,
“AMP, Boral, Brambles, Leighton, NAB and Telstra. With the exception of Brambles, these are mostly junk bond material” I agree with this statement except for Leighton, would it be possible for you to provide some explatation for you negitive outlook on Leighton?
Thanks & Cheers
Simon
Roger Montgomery
:
Hi Simon,
That part of the article is being re-edited as it is in error. There was a typo and then it was subbed incorrectly. The sentence should read: …while these companies are not junk bond material, they don’t receive the highest quality ratings either.” I hope that clarifies.
Lloyd
:
Gee, I thought it read pretty well and factually in the original, at least as far as shareholder returns over the decade have been for all but LEI! Certainly it is true to say that they have proven a pretty sorry bunch for long term (buy and hold) investors, but for LEI. Yet the financial advisors, brokers and analysts still love them….it must be the liquidity and associated commissions!
Roger Montgomery
:
Hi Lloyd,
Probably why the subeditor accepted it.
Luke
:
Hi Roger,
In your list, I noticed there are two newspapers. With the Internet coming of age, I don’t see any newspaper as having a “competitive advantage” in the long term. Of course, newscorp does more than just newspapers but I have read a few stories of them trying to charge for online content – this will not work. You can charge for the Eureka Report or the wall street journal because its tax deductible investment advice but you can’t charge for normal every day news. The BBC and ABC will always offer it for free online. Although in the USA, they don’t have any “socialist” media :)
Other than that, great list of stocks – I own a few of them although, interestingly, CSL has been the worst returning stock in my portfolio!
Roger Montgomery
:
Hi Luke,
A1 does not mean “Buy”. It does not mean it is cheap. It does not mean its intrinsic value is rising either. A1 means it has a very low (the lowest on a relative basis) chance of going bust. Thats all. There’s a lot of work to do after that determination as you correctly point out. Buffett said last year that he now would not buy a newspaper at any price.
Peter drizos
:
Hi would like to see this edition of eureka report
Roger Montgomery
:
Hi Peter,
You will have to ask Alan at the Eureka Report.