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Newest Guru Scott Black’s Top 5 Buys

August 30, 2012 | About:
Holly LaFon

Holly LaFon

329 followers
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. (NASDAQ:QCOM), Meredith Corp (NYSE:MDP), EMC Corp (NYSE:EMC), Tupperware Brands (NYSE:TUP) and Tenaris SA ADR (NYSE:TS).

Qualcomm (NASDAQ:QCOM)

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 (NYSE: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 (NYSE: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 (NYSE: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 (NYSE: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 .

Rating: 3.0/5 (9 votes)

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