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Holly LaFon
Holly LaFon
Articles (7942) 

Scott Black's Top Fourth Quarter New Buys

January 31, 2013 | About:
Scott Black founded Delphi Management in 1978 on value investing precepts, emphasizing the fundamental performance of companies over the long term. He is known for contacting the management of every company that is a prospect for investment before committing capital.

In the fourth quarter, Black bought 7 new stocks for his portfolio of 130 stocks, valued at almost $672 million. The largest of the new stocks include: CVS Caremark Corp. (NYSE:CVS), U.S. Bancorp (NYSE:USB), Brinker International Inc. (NYSE:EAT), Life Technologies (NASDAQ:LIFE) and Century Bancorp Inc. (NASDAQ:CNBKA).

CVS Caremark Corp. (NYSE:CVS)

New buy CVS Corp. represents 1.2% of the portfolio, at 172,675 shares, purchased for $47 a share on average.

With a market cap of $63.93 billion, CVS is a health care service and pharmacy serving more than 5 million people every day. It operates pharmacies, MinuteClinics and pharmacy benefits.

CVS’s fundamentals have expanded significantly over the past 10 years. The company’s revenue per share growth rate is 11.3%, EBITDA growth rate is 19% and book value growth rate is 20.4%.

In the third quarter ended Sept. 30, 2012, CVS Caremark announced a 13.3% increase in net revenue to a record $30.2 billion, including a 22.2% increase in pharmacy services and a 5.5% increase in retail pharmacy. Net income also increased, to $1.006 billion from $867 a year previously.

CVS has a P/E of 17.7, P/B of 1.8 and P/S of 0.5582. Both its P/B and P/S ratios stand at three-year highs, and its Thursday share price of $49.24 is close to a 10-year high.


CVS data by GuruFocus.com

U.S. Bancorp (NYSE:USB)

U.S. Bancorp is 1.2% of Black’s portfolio, after he purchased 248,360 shares in the fourth quarter for $33 per share on average.

U.S. Bancorp has increased its revenue per share annually for the past nine years, at a rate of 5% on average for the past 10 years. Over the same period, book value increased at a rate of 7% and EBITDA declined at a rate of 3.3%.

The bank has increased its return on equity and return on assets annually since 2009, to reach 14.3% return on equity and 1.4% return on assets in 2011. In the past five years, its stock has gained 0.61%.

U.S. Bancorp has a P/E of 11.8. Its P/B ratio at 1.73 is close to a two-year high and its P/S ratio at 2.81 is close to a three-year high.


USB data by GuruFocus.com

Brinker International Inc. (NYSE:EAT)

Black bought 44,981 shares of Brinker International Inc. for $31 a share on average, and a 0.21% weighting in his portfolio.

Restaurant company Brinker International is owner of more than 1,500 restaurants in 32 countries and two territories, such as Chili’s and Maggiano’s. In the past five years, its stock ran up 76.4% to $32.74 per share on Thursday.

The past 10 years show a growth rate of 3.4% for revenue per share, 1.7% for EBITDA and 11.1% for free cash flow, on average annually for the company. Its book value concurrently declined at a rate of 6.2%.

Brinker has a P/E of 16.13, P/B of 9 and P/S of 0.9021, which is close to a one-year low.


EAT data by GuruFocus.com

Life Technologies (NASDAQ:LIFE)

Black bought 8,275 shares of Life Technologies for $49 per share on average in the fourth quarter, for a mere 0.06% of his portfolio.

Biotech company Life Technologies Corp. confronts difficult scientific challenges, offering 50,000 products for agricultural biotechnology, translational research, molecular medicine and diagnostics, and a range of other fields. It has a market cap of $11.13 billion, and its stock has increased 148% in the past five years.

The company’s rapid growth in the past 10 years is evidenced in its average annual growth rates of 14.2% for revenue per share, 18.6% for EBITDA and 5.9% for book value. It has also been generating cash flow in the millions since 2006.

Life has a P/E of 28.2, P/B of 2.4 – close to a one-year high – and P/S of 3.07.


LIFE data by GuruFocus.com

Century Bancorp Inc. (NASDAQ:CNBKA)

Black’s fifth-largest buy was 7,271 shares of Century Bancorp for $32 per share on average, equal to a 0.036% weighting in his portfolio.

Century Bancorp is a customer-focused holding company for Century Bank and Trust Company, a bank for commercial, government, nonprofit and individual customers in the state of Massachusetts.

After a gradual decline, Century Bancorp’s revenue has been on a growth trend since 2006. In fiscal 2011, it reported $71.54 million in revenue, an increase from $67.77 million in 2010. For the past 10 years it has produced positive net income, which totaled $16.69 million in 2011, an increase from $13.57 in 2010. Over the past five years, its stock has increased 54% to trade for $33.33 on Thursday, a price close to its five-year high.

The bank has a return on equity rate of 10.4% in fiscal 2011, and a return on assets rate of 0.60% in 2011.

Century Bancorp also has a P/E of 9.7, P/B of 1 and P/S of 2.3, which is close to its three-year high.


CNBKA data by GuruFocus.com

View more of Scott Black’s investing moves in the fourth quarter at his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Scott Black.

Rating: 2.3/5 (3 votes)


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