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Newest Guru Scott Black’s Top 5 Buys
Posted by: Holly LaFon (IP Logged)
Date: August 30, 2012 04:35PM
Scott Black, the most recent guru added to GuruFocus’ roster, founded Delphi Management, a long-only fund with approximately $900 million in assets under management, in 1980. Black’s firm asks two questions about companies when making purchasing decisions: “(i) Is the company under scrutiny a good business? (ii) Can we purchase this business at a cheap price in the marketplace?” They invest only in stocks of U.S.-listed companies.
In the second quarter, Black’s portfolio contained 136 stocks, including 12 new ones. His five top buys are Qualcomm Inc. (QCOM), Meredith Corp (MDP), EMC Corp (EMC), Tupperware Brands (TUP) and Tenaris SA ADR (TS).
Black purchased 147,175 shares of Qualcomm at an average price of $61 during the quarter.
Qualcomm Inc. develops and delivers innovative digital wireless communications products and services based on the company's CDMA digital technology. Qualcomm Inc. has a market cap of $107.02 billion; its shares were traded at around $61.36 with a P/E ratio of 19.8 and P/S ratio of 7.2. The dividend yield of Qualcomm Inc. stocks is 1.6%. Qualcomm Inc. had an annual average earnings growth of 18.2% over the past 10 years. GuruFocus rated Qualcomm Inc. the business predictability rank of 3.5-star.
Delphi favors companies that earn a 15% after-tax return on equity. Qualcomm has reached this benchmark for the last two years.
Delphi also looks for companies with low debt/equity ratios. QCOM’s debt/equity ratio is 0.04.
Meredith Corp (MDP)
Black bought 215,846 shares of Meredith Corp. at an average price of $30.
Meredith Corp. has two business segments: publishing and broadcasting. Meredith Corporation has a market cap of $1.47 billion; its shares were traded at around $32.42 with a P/E ratio of 13 and P/S ratio of 1.1. The dividend yield of Meredith Corporation stocks is 4.7%. Meredith Corporation had an annual average earnings growth of 2.8% over the past 10 years.
Meredith Corp. had a return on equity of 13.1% in 2012, down from 16.4% in 2011. Its debt/equity ratio is 0.48, an increase from 0.25 in 2011.
In the company’s fiscal fourth quarter, revenues grew 6% and earnings per share grew 2%. For fiscal 2012, earnings per share declined to $2.50 from $2.78 in 2011, when it had additional earnings from political advertising.
EMC Corp (EMC)
Black bought 174,500 shares of EMC Corp. at an average price of $26.
EMC Corporation and its subsidiaries design, manufacture, market and support a wide range of hardware and software products and provide services for the storage, management, protection and sharing of electronic information. EMC Corporation has a market cap of $56.02 billion; its shares were traded at around $26.38 with a P/E ratio of 19.6 and P/S ratio of 2.8. EMC Corporation had an annual average earnings growth of 29.3% over the past 10 years. GuruFocus rated EMC Corporation the business predictability rank of 4-star.
In fiscal 2011, EMC’s return on equity was 12.4%, increased from 10.5%. Its debt to equity is 0.08, a decrease from 0.18 in 2010.
In the second quarter 2012, EMC marked its 10th consecutive quarter of double-digit, year-over-year consolidated revenue growth, GAAP net income and GAAP and non-GAP EPS. Revenue rose 10%, GAAP net income 19%, GAAP earnings per weighted average diluted share 21%, and non-GAAP earnings per weighted average diluted share 11%.
Tupperware Brands (TUP)
Black bought 58,882 shares of Tupperware Brands at an average price of $57.
Tupperware Brands Corporation is a global direct seller of premium, innovative products across multiple brands and categories through an independent sales force. Tupperware Brands Corporation has a market cap of $3.02 billion; its shares were traded at around $52.79 with a P/E ratio of 11.6 and P/S ratio of 1.2. The dividend yield of Tupperware Brands Corporation stocks is 2.7%. Tupperware Brands Corporation had an annual average earnings growth of 7.9% over the past 10 years. GuruFocus rated Tupperware Brands Corporation the business predictability rank of 2.5-star.
Tupperware’s 2011 return on equity was 43.6%, an increase from 28.6% in 2010. Its debt/equity ratio was 1.22, an increase from 0.54 in 2010.
Tupperware’s second-quarter adjusted diluted earnings per share was up 22%, excluding the impact of foreign exchange, year over year. Emerging markets comprised 61% of the company’s sales in the second quarter, and increased 1% in dollars and 14% in local currency. Its established markets businesses declined 13% in dollars and 6% in local currency. Its results were under guidance, namely due to softness in France, Japan, the U.S. and nutrimetrics Australia.
Tenaris S.A. ADR (TS)
Black bought 92,100 shares of Tenaris at an average price of $35.
Tenaris S.A., a corporation organized in Luxembourg, is a manufacturer and supplier of seamless steel pipe products and associated services to the oil and gas, energy and other industries. Tenaris S.A. ADR has a market cap of $24.48 billion; its shares were traded at around $40.74 with a P/E ratio of 15 and P/S ratio of 2.5. The dividend yield of Tenaris S.A. ADR stocks is 1.8%. Tenaris S.A. ADR had an annual average earnings growth of 20.2% over the past 10 years.
Tenaris had a 12.7% return on equity in 2011, an increase from 10.8% in 2010. Its debt/equity ratio was 0.01, a decrease from 0.02 in 2010.
In the second quarter, Tenaris’ net sales increased 17% year over year, and net income increased 51% year over year, and 7% and 1% sequentially.
See Scott Black’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Scott Black .
Guru Discussed: Scott Black: Current Portfolio, Stock Picks
Stocks Discussed: QCOM, MDP, EMC, TUP, TS,