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30 Montier cheap stocks

December 10, 2011 | About:
ValueInvestingID

ValueInvestingID

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I am a big fan of James Montier. He is a great great teacher of the value investing approach and philosophy. In his September 16th, 2008 newsletters he did something he rarely does: share one of his approaches to stock screening. The goal of the article was to explore the benefits of global value investing through the investment in “cheap stocks”. Based on Montier’s analysis, portfolio of those cheap stocks outperformed by a wide margin indexes both on country and global levels.

In order to identify some interesting investment ideas, I have decided to re-create this “Montier cheap stock” screen. Rather than using only one definition of cheapness, Montier suggests ranking stocks based on 5 metrics: P/E, P/B, P/CF, Price / Sales and Enterprise Value / EBIT. In order to eliminate a bias towards small cap stocks he also suggested a minimum market capitalization of $250M. Unfortunately I do not have access to data on global stocks so I limited my search to US-listed stocks.

All stocks with positive earnings, cash flow and operating income are ranked using the 5 metrics above. I then add the score/ranking on each metrics and selected the 30 stocks with the lowest total “score” to come to the following list of “Montier cheap stocks”:

Company Ticker Industry Market Cap Share Price z-score
ITT Corporation ITT 0218 - Misc. Capital Goods 1,789 19.94 1.99
Fiat S.p.A. FIATY 0412 - Auto & Truck Manufacturers 6,607 5.32 1.42
Career Education Corp. CECO 0969 - Schools 531 7.14 3.32
AXA AXAHY 0709 - Insurance (Life) 34,661 14.86 0.32
Trina Solar Limited TSL 1033 - Semiconductors 596 7.96 2.55
Deutsche Lufthansa AG DLAKY 1106 - Airline 5,579 12.17 1.55
JA Solar Holdings Co., Ltd. (A JASO 1033 - Semiconductors 272 1.62 2.47
CNO Financial Group, Inc. CNO 0709 - Insurance (Life) 1,494 6.31 0.43
Satyam Computer SAYCY 1036 - Software & Programming 1,481 2.4 5.13
Yingli Green Energy Hold. Co. YGE 1033 - Semiconductors 710 4.45 1.51
LUKOIL LUKOY 0606 - Oil & Gas - Integrated 43,641 50.85 4.22
Valero Energy Corporation VLO 0609 - Oil & Gas Operations 11,687 21.15 3.84
Tesoro Corporation TSO 0609 - Oil & Gas Operations 3,022 21.79 4.18
Mercer International Inc. MERC 0133 - Paper & Paper Products 329 5.91 1.65
Reinsurance Group of America RGA 0706 - Insurance (Accident & Health) 3,661 51.38 0.69
Hartford Financial Services HIG 0715 - Insurance (Property & Casualty) 7,667 17.49 0.23
Research In Motion Limited (US RIMM 1003 - Communications Equipment 8,576 16.46 4.13
KEMET Corporation KEM 1024 - Electronic Instruments & Controls 351 7.7 2.87
MetLife, Inc. MET 0709 - Insurance (Life) 32,744 31.79 0.22
Symetra Financial Corporation SYA 0709 - Insurance (Life) 1,083 9.42 0.3
Protective Life Corp. PL 0709 - Insurance (Life) 2,018 22.41 0.24
ZHONGPIN INC. HOGS 0515 - Food Processing 350 9.44 3.15
OMV AG OMVKY 0609 - Oil & Gas Operations 10,393 32.77 1.91
Community Health Systems CYH 0806 - Healthcare Facilities 1,613 17.61 1.28
Lincoln National Corporation LNC 0709 - Insurance (Life) 5,925 20.04 0.23
Cosan Limited CZZ 0609 - Oil & Gas Operations 3,270 12.34 1.87
M & F Worldwide Corp. MFW 0909 - Business Services 482 24.99 0.95
BE Semiconductor Industrs NV ( BESIY 1033 - Semiconductors 271 6.51 4.23
Boise Inc. BZ 0133 - Paper & Paper Products 638 6.2 2.15
Vishay Intertechnology VSH 1033 - Semiconductors 1,434 9.43 2.81


Disclosure: I do not own any of the stocks mentioned here.


Rating: 3.1/5 (13 votes)

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