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Undervalued Predictable Portfolio Review; Winners: Whole Foods Market Inc., NBTY Inc., Lamar Advertising Company; Losers: Lakeland Bancorp Inc., Renasant Corp., Valero Energy Corp.

January 06, 2010 | About:
guruek

guruek

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(GuruFocus, January 6, 2010) It is the beginning of a new year, and the decade, time to take a look at the Model portfolios that we set up at the beginning of the last year. Available to the Premium Members only, GuruFocus set up six portfolios after the market close of 2008, based on six concepts:



GuruFocus is happy to report that all six model portfolios outperformed the S&P500 during the turbulent year of 2009.

Today we review the last portfolio, Top 25 Undervalued Predictable Companies

Undervalued Predictable Portfolio

GuruFocus defines Undervalued Predictable Companies are defined as the Predictable Companies that have a lower P/E ratio at the end of the year than its 11-year average EBITDA growth rate. At the beginning of each year, GuruFocus selects top 25 stocks based on this criteria.[/b]

The companies selected for 2009 can be seen at the end of this article. The portfolio is updated once a year, the latest portfolio can be viewed here. Because of methodology of the selection, it is high turn-over portfolio. The 2010 portfolio consists of 7 stocks selected at the beginning of 2009 and 18 stocks at the beginning of 2010.

Performance

For 2009, the portfolio returned 53.96%, beating S&P 500’s 23.45% return for the year.

In the comparison, both performances for the portfolio and the S&P 500 do not include the dividend yield.

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Winners

Twenty-two of the 25 stocks rose during 2009. Three stocks rose more than 100%:

Whole Foods Market Inc. (WFMI)

Whole Foods Market is the largest purveyor of natural foods in the world. Whole Foods Market Inc. has a market cap of $3.93 billion; its shares were traded at around $27.94 with a P/E ratio of 31.7 and P/S ratio of 0.5. Whole Foods Market Inc. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Whole Foods Market Inc. the business predictability rank of 3.5-star.

WFMI was up 191% for the year.

NBTY Inc. (NTY)

NBTY INC. is a manufacturer and marketer of nutritional supplements in the United States. It sells more than 350 products consisting of vitamins and other nutritional supplements such as minerals, amino acids and herbs. Nbty Inc. has a market cap of $2.77 billion; its shares were traded at around $44.73 with a P/E ratio of 18 and P/S ratio of 1.1. Nbty Inc. had an annual average earning growth of 16.4% over the past 10 years. GuruFocus rated Nbty Inc. the business predictability rank of 5-star.

WFMI was up 178% for the year.

Lamar Advertising Company (LAMR)

Lamar Advertising Company is an owner and operator of outdoor advertising structures in the United States. They also operate the largest logo sign business in the United States and transit advertising displays on bus shelters, bus benches and buses in several markets. Lamar Advertising Company has a market cap of $3.1 billion; its shares were traded at around $33.79 with and P/S ratio of 2.7. Lamar Advertising Company had an annual average earning growth of 9.2% over the past 10 years. GuruFocus rated Lamar Advertising Company the business predictability rank of 5-star.

LAMR was up 147.5% for the year.

Losers

Of the 25 companies, only three companies saw their stocks lost value in 2009.

Lakeland Bancorp Inc. (LBAI)

LAKELAND BANCORP INC. is a bank holding company engaged in general banking business. Lakeland Bancorp Inc. has a market cap of $140.9 million; its shares were traded at around $5.91 with and P/S ratio of 0.9. The dividend yield of Lakeland Bancorp Inc. stocks is 3.5%. Lakeland Bancorp Inc. had an annual average earning growth of 12.3% over the past 10 years. GuruFocus rated Lakeland Bancorp Inc. the business predictability rank of 4-star.

LBAI was down 43% for the year.

Renasant Corp. (RNST)

Renasant Corporation is the parent of Renasant Bank and Renasant Insurance, Inc. Renasant Corp. has a market cap of $284.6 million; its shares were traded at around $13.5 with a P/E ratio of 19.5 and P/S ratio of 1.2. The dividend yield of Renasant Corp. stocks is 5%. Renasant Corp. had an annual average earning growth of 11.3% over the past 10 years.

RNST was down 20% for the year.

Valero Energy Corp. (VLO)

Valero Energy Corporation owns and operates refineries in the United States and Canada. Valero is also one of the nation's leading retail operators with retail outlets in the United States and Canada under various brand names. Valero Energy Corp. has a market cap of $10.62 billion; its shares were traded at around $18.81 with a P/E ratio of 16.5 and P/S ratio of 0.1. The dividend yield of Valero Energy Corp. stocks is 3.2%. Valero Energy Corp. had an annual average earning growth of 35.9% over the past 10 years. GuruFocus rated Valero Energy Corp. the business predictability rank of 5-star.

VLO was down 22.6% for the year.

Conclusion

Most of the stocks in the Top 25 Undervalued Predictable Companies portfolio rose during 2009. By combining high quality (predictable) and low valuation, we may have a winning strategy in hand.

GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Company Insiders for Premium Members. Access to details of model portfolio is just one of many benefits for premium members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.

2009 Top 25 Undervalued Predictable Companies Portfolio

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Rating: 3.8/5 (4 votes)

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