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Sarah Ketterer's Top New Stock Buys for Causeway International Value Fund

Holly LaFon

258 followers
Sarah Ketterer’s Causeway International Value Fund (CIVIX) is populated by companies with market capitalizations over $750 million that have undergone rigorous bottom-up analysis. “We believe that companies derive their value from the contribution of yield and profitable re-investment back into the company,” the firm says on its website.

The countries most represented in the fund are the United Kingdom, Japan, Germany, Switzerland and France. The portfolio also contains 60 stocks, with a value of $1.99 billion. Six stocks are new in the first quarter: Royal Dutch Shell PLC (LSE:RDSA), Imperial Oil Ltd. (TSX:IMO), Hitachi Ltd. (TSE:6501), Energias de Portugal SA (XLIS:EDP).

4. Energias de Portugal SA (XLIS:EDP)

Ketterer bought 1,776,742 shares of the company, a holding valued at $5.47 million and weighted at 0.27%.

Energias de Portugal is an electric energy and natural gas distribution company based in Portugal with subsidiaries across Europe and the U.S.

The company’s revenue has been increasing annually since 2010, while its stock price declined by 44% over the past five years.

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EBITDA per share also increased at a rate of 4.2%, and book value increased at a rate of 13.7% annually over the past five years.

The company’s net debt declined by 0.1 billion euros to 18.1 billion at March 31, 2013, and a total cash position of 4.5 billion euros.

At 0.56, EDP’s P/S ratio has slid to near a one-year low. It also has a P/E of 13.5 and P/B of 0.79.

3. Hitachi Ltd. (TSE:6501)

Ketterer added 3,376,000 million shares of the company, valued at $19.58 million, at a portfolio weight of 0.98%.

Hitachi is a diverse company with 11 segments, such as telecommunication systems, electricity systems and social and industrial systems. The company’s stock declined 13% over the past five years.

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In fiscal year ended March 31, 2013, Hitachi reported 9.04 trillion yen, compared to 9.67 trillion yen in the fiscal year ended March 31, 2012. Net income declined as well to 237.7 billion yen from 412.81 billion yen, due to a lower net gain on securities. Free cash flow was 30 billion yen, down 221.5 billion yen from the previous year, which benefited from a business sale, and the acquisition of UK company Horizon Nuclear Power Limited.

Hitachi ended the fiscal year with cash and cash equivalents of $527.63 billion yen, down from $519.58 billion yen the previous fiscal year.

Hitachi currently has a P/E of 18.46.

2. Imperial Oil Ltd. (TSX:IMO)

Ketterer bought 481,000 shares of the company, valued at $19.66 million in total. The portfolio weight is 0.99%.

Imperial Oil is a crude oil and natural gas company based in Canada and separated into three segments: upstream, downstream and chemical. Its stock declined 34% over the past five years.

In the first quarter of 2013, Imperial Oil reported $8.01 billion in total revenues, a decline from $7.53 billion in the first quarter of 2012. Net income declined $798 million from $1.02 billion, due primarily to lower liquids realization, higher refinery maintenance activities, lower volumes and higher maintenance costs , partially offset by lower royalty costs derived from lower liquids and higher refining margins.

Imperial Oil ended the quarter with $2.56 billion, a decline from $3.29 billion in the previous year. It also carries $9.21 billion in long term liabilities and debt, rising from $6.31 billion in the previous year.

Imperial Oil Ltd.’s five-year price and net income history:

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The company’s P/E is 9.71, P/B is 2.1 and P/S is 1.09 – all of which are close to their individual three-year low.

1. Royal Dutch Shell PLC (LSE:RDSA)

Royal Dutch Shell was Ketterer’s largest new holding. She bought 950,874,000 shares with a total value of $30.76 million, standing at 1.5% of her portfolio.

Royal Dutch Shell is an energy and petrochemical group with a presence in more than 70 countries and territories. Its stock is up 0.95% over the past five years.

The company’s revenue and net income declined in 2012 after two years of solid growth:

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Its cash balance also declined to $53.9 billion at the end of the first quarter of 2013, from $60 million in the first quarter of 2012. Long-term liabilities and debt increased to $49.6 billion from $46.8 billion.

Royal Dutch Shell’s P/E fell to near a one-year low of 8.05 and its P/B to a near three-year low of 1.12. It also has a P/S of 1.12, while its price has climbed to a 10-year high of $23.85.

To see more of Sarah Ketterer’s trades, go to her portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Sarah Ketterer.


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