The GuruFocus business predictability rating ranks companies on a five-star scale, defining the more predictable companies as enterprises whose revenue per share and Ebitda per share are growing steadily and who have produced a strong long-term performance of their stock prices.
Thus, an investment strategy based on a "buy and hold" approach could be more successful if applied to stocks with a high GuruFocus business predictability rating. Value investors may be interested in the following three companies, as they have high business predictability ratings from GuruFocus.
Accenture PLC
The first company that makes the cut is Accenture PLC (ACN, Financial), a Dublin, Ireland-based supplier of professional services to businesses worldwide.
Accenture's business has the highest score of 5 stars for its predictability rank. The company saw the revenue per share grow by 7.9% and the Ebitda per share grow by 10% on average every year over the past 10 years.
The share price ($254.77 at close on Friday) has risen 395% over the past 10 years for a market capitalization of $168.80 billion.
GuruFocus assigned a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10 to the company.
The price-earnings ratio is 31.38 versus the industry median of 32.33, the enterprise-value-to-Ebitda ratio is 18.56 and the price-sales ratio is 3.69 versus the industry median of 3.02.
As of January, Wall Street sell-side analysts recommend seven strong buys, nine buys, 12 holds and one underperform rating for the company for an average target price of $280.28 per share.
Costco Wholesale Corp
The second company that holds the criteria is Costco Wholesale Corp (COST, Financial), an Issaquah, Washington-based operator of warehouse discount stores.
Costco's business has the highest score of 5 stars for its predictability rank. The company saw the revenue per share grow by 7.1% and the Ebitda per share grow by 8.7% on average every year over the past 10 years.
The current share price ($362.30 as of Friday) has risen by nearly 400% over the past 10 years for a market capitalization of $160.48 billion.
GuruFocus assigned a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10 to the company.
The price-earnings ratio is 37.2 compared to the industry median of 18.59, the enterprise-value-to-Ebitda ratio is 20.7 and the price-sales ratio is 0.93 versus the industry median of 0.46.
As of January, Wall Street sell-side analysts recommend seven strong buys, seven buys and 11 hold ratings for the stock with an average target price of $400.37 per share.
Linde PLC
The third company that qualifies is Linde PLC (LIN, Financial), a Guildford, United Kingdom-based global industrial gas company.
Linde PLC's business has a good predictability rank of 3.5 out of a total of 5 stars. The company saw the revenue per share grow by 4% and the Ebitda per share grow by 6.2% on average every year over the past 10 years.
The current share price ($251.48 as of Friday) has risen by 175.02% over the past 10 years for a market capitalization of $131.99 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 59.73 versus the industry median of 23.52, the enterprise-value-to-Ebitda ratio is 18.59 versus the industry median of 14 and the price-sales ratio is 4.96 versus the industry median of 1.45.
As of January, Wall Street sell-side analysts recommend a median rating of overweight with an average target price of $287.85 per share for the stock.
Disclosure: I have no position in any security mentioned.
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- A Trio of Stocks Trading Below Their Earnings Power Values
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