Robert Olstein (Trades, Portfolio) of Olstein Capital Management, L.P. looks for the "boring stocks" that all have a common theme to add to his portfolio of 118 stocks, with a quarter-over-quarter turnover of 16%.
"Our current portfolio consists of companies that we believe have a sustainable competitive advantage, discernible balance sheet strength, a management team that emphasizes decisions based on cost of capital calculations, deploys free cash flow to create shareholder value and is selling at a discount to our calculation of intrinsic value which is based on a company’s normalized ability to generate future free cash flow," says Olstein in the Olstein All Cap Value Fund Q3 2014 Letter to Shareholders - When Boring Becomes Exciting.
Here's a look at three of Olstein's newest buys.
Twenty-First Century Fox Inc (FOX, Financial)
Purchasing 211,000 shares of FOX at an average price of $34.11/share had a 0.95% overall impact on the firm's portfolio.
FOX was incorporated in 1979 as an Austrailian diversified media and entertainment company.
According to the chart above, Peter Lynch values the stock at $32.00, although it is currently selling at $33.53/share, meaning the stock may be slightly overvalued.
The company's current ratio is 1.63, which is an indication of good short-term financial strength. The current P/E ratio is 17.39 and the P/S ratio is 2.29, which is close to the 2-year low of 2.22. The stock's P/B ratio is 4.46.
Olstein's new buy of 106,000 shares of PNR had a 0.86% impact on his overall portfolio.
Olstein had first acquired this stock in 2012, in which he purchased 134,000 shares of the stock at an average price between $38.43-41.83 and then sold all of the shares by the first quarter of 2014. Then by the fourth quarter, he chose to buy stakes in the stock again at an average price of $65.32/share.
Pentair was incorporated in 2013 as a diversified industrial manufacturing company.
According to the chart above, Lynch values the stock at $61.00 and the stock is currently trading at $63.96/share, meaning the stock is possibly overvalued.
The company has a current ratio of 1.83, indicating it may have good short-term financial strength. The P/B ratio is 2.39, which ranks it higher than 61% of the other companies in the global diversified industry. The P/E ratio is 52.40 and the P/S ratio is 1.63.
Olstein purchased 690,000 shares of WEN at an average price of $8.44/share, which had a 0.76% impact on his overall portfolio.
Wendy's was incorporated in 1929 as a quick-service restaurant the specializes in hamburgers and sandwiches.
Lynch values the stock at $5.20, yet the stock's current pice is $10.97, meaning it may be overvalued.
As of today, the current P/E ratio is 32.74 and the P/B ratio is 2.38. The stock's P/S ratio is 2.00, which is close to the 10-year high of 2.02. The current ratio is 1.98, indicating possible short-term financial strength.
"Many investors, seeking outsized investment returns, favor widely-held, glamour stocks whose popularity is driven by the promise of high growth rates, especially in revenues. The stocks of these high-flying companies attract a significant number of momentum investors as well as fawning media coverage that, in turn, fuels the momentum as the overall market continues to rise. We, on the other hand, are value investors who avoid the noise surrounding the latest hot trend, and look to buy the common stocks of good businesses that we believe are selling at material discounts to their intrinsic value," Olstein says.
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