The GuruFocus business predictability rating ranks companies on a five-star scale, defining the more predictable companies as businesses whose revenue per share and Ebitda per share have been 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 likely lead to success with stocks that have a high GuruFocus business predictability rating, in my opinion. Value investors may want to consider the following three companies, as they have high business predictability ratings from GuruFocus.
Automatic Data Processing Inc
The first company that matches the criteria is Automatic Data Processing Inc (ADP, Financial), a Roseland, New Jersey-based provider of cloud-based human capital management solutions.
Automatic Data Processing's business has a 3.5-star rating for its predictability. The company saw its revenue per share increase by 6.80% and its Ebitda per share increase by 10.60% on average every year over the past 10 years.
The share price ($207.20 as of early trading on Wednesday) is currently almost five times its level of 10 years ago. The stock has a market capitalization of $88.28 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 34.16 versus the industry median of 22.09, the enterprise-value-to-Ebitda ratio is 22.51 versus the industry median of 12.37 and the price-sales ratio is 5.91 versus the industry median of 1.35.
As of August, Wall Street sell-side analysts recommend a median rating of hold for the stock with an average target price of $210.81 per share.
Lam Research Corp
The second company that meets the criteria is Lam Research Corp (LRCX, Financial), a Fremont, California-based designer and manufacturer of semiconductor processing equipment which is used to produce integrated circuits.
Lam Research Corp's business has a 3-star business predictability rank. The company saw its revenue per share increase by 21.40% and its Ebitda per share increase by 28.10% on average every year over the past 10 years.
The share price ($587.40 as of early trading on Wednesday) represents a more than 15-fold increase from 10 years ago. The stock has a market capitalization of $83.57 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 21.85 versus the industry median of 26.71, the enterprise-value-to-Ebitda ratio is 16.95 versus the industry median of 16.01 and the price-sales ratio is 5.84 versus the industry median of 2.91.
As of August, Wall Street sell-side analysts recommend a median rating of overweight for this stock and have established an average target price of about $746.90 per share.
HCA Healthcare Inc
The third company that meets the criteria is HCA Healthcare Inc (HCA, Financial), a Nashville, Tennessee-based provider of medical care services in the U.S. and the UK through 185 general, acute care, psychiatric and rehabilitation hospitals. The company also operates 142 freestanding surgery and endoscopy centers.
HCA Healthcare Inc's business has a 4.5-star business predictability rank. The company saw its revenue per share increase by 11.60% and its Ebitda per share increase by 10% on average every year over the past 10 years.
The current share price ($252.20 as of early trading on Wednesday) has increased by almost 13 times over the past 10 years, determining a market capitalization of $80.61 billion.
GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 9 out of 10 to the company.
The price-earnings ratio is 17.27 versus the industry median of 29.17, the enterprise-value-to-Ebitda ratio is 10.15 versus the industry median of 16.19 and the price-sales ratio is 1.53 versus the industry median of 2.65.
As of August, Wall Street sell-side analysts recommend a median rating of overweight for the stock with an average target price of $272.05 per share.
Disclosure: I have no position in any security mentioned.
