Predictable companies are usually characterized by a consistent record of revenue and Ebitda, which is often linked to a 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 three stocks listed below, as they represent U.S. listed equities in companies that have a high rating for business predictability.
Lowe's Companies Inc
The first company that makes the cut is Lowe's Companies Inc (LOW, Financial), a Mooresville, North Carolina-based home improvement retailer in North America and Mexico.
Lowe's Companies' business has a high score of 4.5 out of 5 stars for its predictability rank. The company saw the revenue per share grow by 12% and the Ebitda per share grow by 11.70% on average every year over the past 10 years.
The share price ($177.16 at close on Thursday) has risen 581.65% over the past 10 years for a market capitalization of $129.81 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 25.06 versus the industry median of 23.13, the enterprise-value-to-Ebitda ratio is 15.26 versus the industry median of 12.54 and the price-sales ratio is 1.57 versus the industry median of 0.79.
As of February, Wall Street sell-side analysts recommend eight strong buys, ten buys, 13 holds and one sell rating for the company for an average target price of $192.42 per share.
The Estee Lauder Companies Inc
The second company that makes the cut is The Estee Lauder Companies Inc (EL, Financial), a New York-based personal care products manufacturer and marketer.
The Estee Lauder Companies Inc's business has a good score of 3 out of 5 stars for its predictability rank. The company saw the revenue per share grow by 7.10% and the Ebitda per share grow by 8.10% on average every year over the past 10 years.
The current share price ($287.96 as of Thursday) has risen by 533.85% over the past 10 years for a market capitalization of $104.46 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 115.65 compared to the industry median of 20, the enterprise-value-to-Ebitda ratio is 53.65 versus the industry median of 11.91 and the price-sales ratio is 7.42 versus the industry median of 1.09.
As of February, Wall Street sell-side analysts recommend seven strong buys, 12 buys and five hold ratings for the stock with an average target price of $293.48 per share.
Micron Technology Inc
The third company that makes the cut is Micron Technology Inc (MU, Financial), a Boise, Idaho-based semiconductors manufacturer.
Micron Technology'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 11.80% and the Ebitda per share grow by 17.40% on average every year over the past 10 years.
The current share price ($88.54 as of Thursday) has risen by 710.76% over the past 10 years for a market capitalization of $99.04 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 33.41 versus the industry median of 33.79, the enterprise-value-to-Ebitda ratio is 10.66 versus the industry median of 20.43 and the price-sales ratio is 4.54 versus the industry median of 2.89.
As of February, Wall Street sell-side analysts recommend eight strong buys, 20 buys and three hold ratings for an average target price of $95.87 per share for the stock.
Disclosure: I have no position in any security mentioned.
Read more here:
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- A Trio of Stocks Trading Below Their Earnings Power Values
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