An investment strategy based on a buy and hold approach has a greater likelihood to prosper if the business is predictable. Such companies usually have a steady record of revenue per share and Ebitda per share, which is often associated 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 want to consider the following three companies, as they have high GuruFocus ratings for business predictability.
Dick's Sporting Goods Inc
The first company that makes the cut is Dick's Sporting Goods Inc DKS, a Coraopolis, Pennsylvania-based sporting goods retailer.
Dick's Sporting Goods Inc's business has a high business predictability rating of 3.5 out of 5 stars. The company saw the revenue per share increase by 11.7% and the Ebitda per share increase by 4.9% on average every year over the past 10 years.
The share price ($57.81 at close on Monday) has climbed 106.2% over the past 10 years for a market capitalization of $5.15 billion.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.
The price-earnings ratio is 20.07 versus the industry median of 21.78, the price-book ratio is 2.52 compared to the industry median of 1.44 and the price-sales ratio is 0.58 compared to the industry median of 0.61.
Transcat Inc
The second company that meets the criteria is Transcat Inc TRNS, a Rochester, New York-based supplier of calibration and laboratory instrument services in Canada, the U.S. and internationally.
Transcat Inc's business has a remarkably high score of 4.5 stars out of 5 for the business predictability rank. The company saw the revenue per share grow by 6.2% and the Ebitda per share grow by 11.8% on average every year over the past 10 years.
The share price ($29.63 as of Monday) has grown 300% over the past 10 years for a market capitalization of $219.66 million.
GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10 to the company.
The stock does not appear cheap as the price-earnings ratio is 30.86 compared to the industry median of 15.26, the price-book ratio is 3.26 compared to the industry median of 0.95 and the price-sales ratio is 1.31 compared to the industry median of 0.45.
Chemed Corp
The third company that qualifies is Chemed Corp CHE, a Cincinnati, Ohio-based company that provides hospice and palliative care services to U.S. patients through an ad hoc network of physicians and other professionals.
Chemed Corp's business has the highest predictability rank of 5 stars. The company saw the revenue per share grow by 7.1% and the Ebitda per share grow by 9.4% on average every year over the past 10 years.
The share price ($480.36 as of Monday) has grown more than 743% over the past 10 years for a market capitalization of $7.65 billion.
GuruFocus assigned a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10 to the company.
The price-earnings ratio is 30.19 versus the industry median of 27.12, the price-book ratio is 10.19 compared to the industry median of 2.66 and the price-sales ratio is 3.92 versus the industry median of 1.86.
Disclosure: I have no position in any security mentioned.
Read more here:
- A Trio of Capital-Intensive Stocks to Consider
- A Trio of Stocks Trading Below the Peter Lynch Earnings Line
- 3 Stock Picks Trading Below Their Earnings Power Values
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
