Leucadia National (LUK)
LUK has a wide range of diversified businesses from oil and gas drilling to winery operations.
For the last year LUK experienced close to a 14% decrease in price. This is compared with an almost 1% increase seen overall by the S&P 500. However, since the start of 2012, LUK has seen a significant price increase of nearly 30% compared with the S&P 500 which saw an 8% increase for the year.
This growth has been spurred primarily by LUK’s holding in Jefferies (JEF). Jeffries is believed to have peaked around the $16 mark - so the same rate of growth is not expected moving forward.
Although, LUK has one of the lowest PE ratios in its industry, the evidence that JEF has peaked means that there is no expectation for further growth in the short term indicating this stock be a sell.
Limited Brands (LTD)
Limited Brands is a retailer specializing in women’s intimate apparel, beauty and personal care products and accessories. Brands include Victoria Secret, La Senza (250 stores in Canada) and Bath and Body works.
LTD share price has seen burgeoning growth in recent months and saw a 52 week high in February 2012 of almost $47.
LTD’s stock price increase is mostly from a steady increase in revenue, particularly from healthy sales in its Victoria Secret stores. LTD saw an increase in revenue for the previous four quarters. This was an increase of close to 15% in the first quarter, almost 10% in the second quarter and almost 13% in the fourth quarter.
Furthermore, LTD has among the highest revenue per employee figures (RPE) in the Apparel Retail Industry. An RPE of $584,000.
Limited Brands is expected to continue its revenue growth into the second quarter which is why LTD is recommended as a buy.
L-3 Communications (LLL)
L-3 Communications Holdings (LLL) is a primary supplier of a wide range of products and systems that are used by many United States Departments for aircraft and defense focus areas.
L-3 contracts are short lived compared to its rivals which can be seen as a weakness. However, L-3 takes a long-term approach to show value for its shareholders and has recently increased its quarterly dividend by 11%. This means it will pay a quarterly dividend of 50 cents per share compared with 45 cents per share.
At time of writing, L-3 has a PE ratio close to 9, which could suggest there remains growth. The PE ratio of its closest rival TransDigm Group Inc (TDG) has a PE ratio closer to 30.
LLL is recommended to be a hold for longer term investors.
H.J. Heinz (HNZ)
H.J Heinz Company manufactures and markets a range of food products around the world. Heinz products are sold in many countries including: Australia, Philippines, Canada, India, Netherlands, United Kingdom and the US.
At time of writing HNZ reported a quarterly increase in nearly 5% of profit. Also, Moving forward Heinz management expect higher than expected earnings for 2012.
Due to the higher commodity prices for food and oil, many of Heinz’s competitors have performed poorly comparatively. General Mills (GIS) and Campbell’s (CPB) in particular have struggled with lower demand in the U.S. However, HNZ has seen a stronger demand internationally - which has helped drive sales.
Not only has Heinz seen fantastic revenue growth, but also offers an almost 4% dividend payout and is therefore regarded as a buy.
Harris corporation is an international communications and IT company that produces wireless equipment. Harris serves government customers worldwide.
Although Harris has seen an almost 12% decline in share price over the last year, there is speculation that it may be due to increase sharply. The speculation is predominantly due to an investigation to its current inventory levels.
It appears that Harris has recently seen an increase in work in progress and raw materials in its type of inventory. All the while keeping a rather low quantity of finished goods. This suggests that it is expecting an increase in sales in the near future.
Also, Harris has recently launched a new “Ruggedized” tablet computer that runs on the Android operating system. The Ruggedized tablet computer will be used to pass real time information from first responders during military operations.
Although Harris shows a few metrics that could indicate an increase in stock price, it is recommended to buy with caution. A fair amount of further homework is suggested in order to confirm the speculation.
About the author:
I fundamentally analyze every business from the top down.
In my personal life, I have a strong Jewish faith and enjoy playing Scrabble and entrepreneurship.