Watch the interview:
Specifically, he made three recommendations during the interview HR Block (HRB), Medtronics Inc (MDT), and DirectTV Group Inc. (DTV). Here is a brief survey of the companies:
1. H&R Block Inc. (HRB)
H&R Block Inc. is a diversified company involved in tax return preparation, electronic filing of income tax returns and other tax-related services. The Company's subsidiaries also offer investment services through broker-dealers, originate, purchase, service, sell and securitize mortgages, offer personal productivity software, purchase participation interests in refund anticipation loans made by a third-party lender, and offer accounting, tax and consulting services to business clients. H&r Block Inc. has a market cap of $6.67 billion; its shares were traded at around $19.9 with a P/E ratio of 13.3 and P/S ratio of 1.7. The dividend yield of H&r Block Inc. stocks is 3%. H&r Block Inc. had an annual average earning growth of 0.9% over the past 10 years.
Nygren likes stock because of its low valuation level. He thinks the stock is selling at 11 times of next year’s earning, making the cash generating business attractive.
2. Medtronic In. (MDT)Medtronic is the world's leading medical technology company, pioneering device-based therapies that restore health, extend life and alleviate pain. Medtronic Inc. has a market cap of $47.36 billion; its shares were traded at around $42.79 with a P/E ratio of 13.8 and P/S ratio of 3.3. The dividend yield of Medtronic Inc. stocks is 1.9%. Medtronic Inc. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Medtronic Inc. the business predictability rank of 4-star.
Nygren thinks the current clouds on the Health Care stocks are exaggerated and he likes MDT in particular because the company is very disciplined in analyzing the economics of their devices earlier on with their innovations.
3. The DIRECTV Group, Inc. (DTV)The DIRECTV Group, Inc. is a world-leading provider of digital multichannel television entertainment, broadband satellite networks and services, and global video and data broadcasting. Directv Group Inc. The has a market cap of $29.83 billion; its shares were traded at around $32.78 with a P/E ratio of 25.6 and P/S ratio of 1.5. Directv Group Inc. The had an annual average earning growth of 12.7% over the past 10 years.
Nygren likes a many media companies, in particular, he thinks the company is attractive because it is selling only 12/13 times of next earning. People were willing to valuate these companies based on EBITDA multiples because there was no accounting earning to talk about, now the company is actually making a profit, yet the stock is selling cheap.
Bill Nygren sees values in every sector and he has no sector that he would bet against. He thinks the more important question for investors ought to be whether they have enough of exposure in the equities.
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About the author:
Mr. Huebscher is the founder and CEO of Advisor Perspectives, a web site and newsletter that provides investment strategy analysis for financial advisors and wealth managers. In 1982, he founded the investment software division of Thomson Financial, where he created the PORTIA product, a portfolio management system for institutional investors. In 1990, he founded Hub Data, a market data redistribution service, which he sold to Advent Software in 1998. He has also worked in the account aggregation field, as a consultant to both vendors and wealth managers. He is a graduate of the Harvard Business School (1982) and Connecticut College (1976).