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4 Stock Picks for a Long-Term Approach

These companies have consistently increased revenue and Ebitda

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Jan 16, 2022
Summary
  • Taiwan Semiconductor Manufacturing Co Ltd, HDFC Bank Ltd, Veeva Systems Inc. and Domino's Pizza Inc. have highly predictable businesses
  • They have grown revenue and Ebitda steadily over the past years, resulting in strong share price performances
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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 (or book value per share in case of financial stocks) have been growing steadily and who have produced a strong long-term performance of their stock prices.

Thus, those following a long-term investment strategy could find attractive investing opportunities by screening the market for stocks that have a high GuruFocus business predictability rating, in my opinion. The following stocks all trade with high business predictability ratings and are recommended by Wall Street.

Taiwan Semiconductor Manufacturing Co Ltd

The first company that matches the criteria is Taiwan Semiconductor Manufacturing Co Ltd (

TSM, Financial), a Taiwanese global producer and distributor of integrated circuits.

Taiwan Semiconductor's business has a three-and-a-half-star business predictability rank. The company saw its revenue per share increase by 12.40% and its Ebitda per share increase by 13.60% on average every year over the past 10 years.

The share price ($140.66 at close on Friday) has increased significantly over the past several years, as shown by the chart below, determining a market capitalization of $729.46 billion.

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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 30.63 versus the industry median of 25.92, the enterprise-value-to-Ebitda ratio is 16.19 versus the industry median of 15.58 and the price-sales ratio is 11.53 versus the industry median of 2.96.

Wall Street sell-side analysts recommend a median rating of buy for the stock with an average target price of $157.58 per share.

HDFC Bank Ltd

The second company that meets the criteria is HDFC Bank Ltd (

HDB, Financial), a Mumbai, India-based bank with operating activities in India, Bahrain, Dubai and Hong Kong.

HDFC Bank Ltd's business has a five-star business predictability rank. The company saw its revenue per share increase by 17.90% and its book value per share increase by 18.90% on average every year over the past 10 years. Regarding this company, since it is a financial stock, the 10-year average growth rate for the book value per share is used to determine the predictability rank of the business in the place of the Ebitda growth rate.

The share price ($71.73 at close on Friday) has grown well over the past 10 years, determining a market capitalization of $132.53 billion.

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GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10 to the company.

The price-earnings ratio is 26.18 versus the industry median of 11.31, the price-book ratio is 3.94 versus the industry median of 1.04 and the price-sales ratio is 9.11 versus the industry median of 2.99.

Wall Street sell-side analysts recommend a median rating of buy for this stock and have established an average target price of about $77.78 per share.

Veeva Systems Inc.

The third company that meets the criteria is Veeva Systems Inc. (

VEEV, Financial), a Pleasanton, California-based provider of cloud-based software for worldwide clients operating in the life sciences industry

Veeva's business has a three-star business predictability rank. The company saw its revenue per share increase by 37% and its Ebitda per share increase by 45.40% on average every year over the past 10 years.

The current stock price ($223.85 per share at close on Friday) has grown like crazy over the past 10 years to a market capitalization of $34.42 billion.

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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 83.84 versus the industry median of 26.44, the enterprise-value-to-Ebitda ratio is 62.77 versus the industry median of 14.07 and the price-sales ratio is 21.35 versus the industry median of 2.37.

Wall Street sell-side analysts recommend a median rating of overweight for the stock with an average target price of $317.85 per share.

Domino's Pizza Inc.

The fourth company that meets the criteria is Domino's Pizza Inc. (

DPZ, Financial), an Ann Arbor, Michigan-based restaurant company that makes and sells pizzas under the Domino's brand name through a network of 18,000 stores operated directly or through franchises in the United States and internationally.

Domino's Pizza's business has a four-star business predictability rank. The company saw its revenue per share increase by 16% and its Ebitda per share increase by 17.50% on average every year over the past 10 years.

The current share price ($473.04 at close on Friday) has increased exponentially over the past 10 years, determining a market capitalization of $17.20 billion.

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GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 8 out of 10 to the company.

The price-earnings ratio is 35.97 versus the industry median of 25.15, the enterprise-value-to-Ebitda ratio is 25.36 versus the industry median of 14.03 and the price-sales ratio is 4.17 versus the industry median of 1.32.

Wall Street sell-side analysts recommend a median rating of overweight for the stock with an average target price of $532.25 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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