An investment strategy based on a buy and hold approach has more chance to prosper if the business is predictable. Such companies typically have a regular record of revenue per share and Ebitda per share, which often go hand in hand with strong long-term performance based on a 10-year study that GuruFocus conducted for the period from 1998 to 2008.
In light of the above, value investors may be interested in the following three companies, as they have high GuruFocus business predictability ratings.
Dollar General Corp
The first company that qualifies is Dollar General Corp (DG, Financial), a Goodlettsville, Tennessee-based operator of discount stores.
Dollar General Corp's business has a high business predictability rating of 4 out of 5 stars. The company saw the revenue per share grow by 11.7%, the Ebitda per share grow by 8.8% and the stock price increase by nearly 18% on average every year over the past 10 years.
The share price ($197.80 at close on Thursday) has grown nearly 603% over the past 10 years for a market capitalization of $50.22 billion.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10 to the company.
The stock is not trading cheaply at the moment, as the price-earnings ratio is 25.83 compared to the industry median of 20.44, the price-book ratio is 6.97 compared to the industry median of 1.77 and the price-sales ratio is 1.73 versus the industry median of 0.42.
Ulta Beauty Inc
The second company that meets the criteria is Ulta Beauty Inc (ULTA, Financial), a Bolingbrook, Illinois-based beauty retail chain company.
Ulta Beauty Inc's business has the highest score of 5 stars out of 5 for the business predictability rank. The company saw the revenue per share increase by 21%, the Ebitda per share increase by 20.3% and the stock price going up by 14.6% per year on average over the past 10 years.
The share price ($205.40 as of Aug. 20) has grown 786% over the past 10 years for a market capitalization of $12.03 billion.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10 to the company.
The stock is not trading cheaply, as the price-earnings ratio of 27.35 is much higher than the industry median of 20.94, the price-book ratio of 6.59 exceeds the industry median of 1.43 and the price-sales ratio of 1.73 is also surpassing the industry median of 0.6.
Akamai Technologies Inc
The third company that makes the cut is Akamai Technologies Inc (AKAM, Financial), a Cambridge, Massachusetts-based provider of cloud services for U.S. and international businesses that operate on the Internet.
Akamai Technologies Inc's business has a high predictability rank of 3.5 out of 5 stars. The company saw the revenue per share rise by 10%, the Ebitda per share increase by 6.8% and the stock price grow by nearly 6% per year on average over the past 10 years.
The share price ($110.35 as of Aug. 20) has grown 137.3% over the past 10 years for a market capitalization of $18.05 billion.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10 to the company.
The price-earnings ratio is 33.42 versus the industry median of 28.53, the price-book ratio is 4.61 versus the industry median of 3.35 and the price-sales ratio is 5.97 compared to the industry median of 2.44.
Disclosure: I have no position in any security mentioned.
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