Prem Watsa (Trades, Portfolio) is the founder of Fairfax Financial Holdings, which he has managed since 1986. The name means “Fair, Friendly Acquisitions.” and in the first five years, from 1985 to 1989, the Book Value per share of Fairfax grew from $1.52 to $10.50.
Currently, the portfolio is composed of 43 stocks, for a total value of $1,545 Mil, and according to GuruFocus, New Oriental Education & Technology Group Inc. (EDU), NewMarket Corp (NEU), Precision Castparts Corp (PCP), and CSX Corp (CSX) are the 4 companies that are having the highest growing EBITDA.
New Oriental Education & Technology Group Inc. (EDU)
EDU has a market Cap of $3.91 billion and is currently trading at P/E (ttm) of 19.50, a very cheap level compared to the Global Education & Training Services industry that has a P/E Median of 218.00. The price dropped by -10% over the last 12 months.
Over the last 5 years, the company's revenue grew by 31.70%, EBITDA grew by 25.20%, Book Value grew by 23.70% and EPS grew by 26.10%. EDU has positive returns (19.00% of ROE, 12.32% of ROA and 68.65% of ROC) and very strong financial situation. It is now out of debt, and this is the best result compared to EDU‘s History. Financial strength is rated 9/10.
Based on DCF model, EDU fair value is $36.15, so these days the stock is trading with a margin of safety of 32%. The Peter Lynch Earnings line Fair Value is set to $17.7, so the company is Overpriced by 41%.
Dodge & Cox is the main holder of EDU. With 6,506,500 shares, the fund holds 4.12% of outstanding shares of EDU.
NewMarket Corp (NEU)
NEU has a market Cap of $5.89 billion and is currently trading at P/E (ttm) of 25.90 at average level compared to the Global Specialty Chemicals industry of 29.90.
At the current price, based on the DCF model, NEU fair value is $523.25, and these days the stock is trading with a margin of safety of 10%. The price rose by 24% over the last 12 months.
The Peter Lynch Earnings line Fair Value is set to $275.1 so the stock looks heavily overpriced by -72%.
Over the last 5 years, the company's revenue grew by 12.40%, EBITDA grew by 11.30% and EPS growth rate is 12.50 %. Book Value is almost at the same levels (+2.60%). NEU has positive returns (45.95% of ROE, 18.21% of ROA and 48.84% of ROC) and good Financial strength, rated 6/10. Returns are at best levels compared to both, History and Industry (better then almost 96% of competitors). Despite this, financial strength is at average-low levels compared to history, when NEU reached a Maximum Cash to Debt ratio of 0.68.
Mario Gabelli is the main Guru holding NEU with 0.24% of shares outstanding, followed by Jim Simons and Chuck Royce, both at 0.08%.
Precision Castparts Corp (PCP)
PCP has a market cap of $30.33 billion and is currently trading at P/E (ttm) of 16.30 at a very cheap level compared to the Global Metal Fabrication industry, which has an average P/E ratio of 28.60. The price dropped by -13% over the last 12 months.
Over the last 5 years, the company's revenue grew by 8.50%, EBITDA grew by 11.40%, EPS grew by 11.60% and Book Value grew by 17.50%. PCP has positive returns (16.30% of ROE, 9.83% of ROA and 47.28% of ROC) and good Financial strength, rated 8/10.
All returns are better then 88% of its competitors, but compared to history are much far from better results. In the past, ROE reached a top level of 28.7%, ROA of 17.46% and ROC of 75.32%.
Cash to Debt is 0.10; a very low level compared to the (not so far) year 2011 when it was 4.90
At the current price, based on DCF model, PCP fair value is $369.8, and these days the stock is trading with a margin of safety of 42%.
The Peter Lynch Earnings line Fair Value is set to $195.8, that means the stock is few Overpriced, just by 8%.
Ruane Cunniff is the main Guru holding PCP with 2.18% of shares outstanding, followed by Warren Buffett (2.01%) and Jeremy Grantham (0.57%).
CSX Corp (CSX)
CSX has a market Cap of $33.23 billion and is currently trading at P/E (ttm) of 17.30 at very cheap level compared to the Global Railroads industry that has an average P/E ratio of 29.10. The price rose by 19% over the last 12 months.
At current price, based on DCF model, CSX fair value is $45.12, and these days the stock is trading with a margin of safety of 26%.
The Peter Lynch Earnings line Fair Value is set to $35.5 putting the company as fairly valued at current prices.
Over the last 5 years, the company's revenue grew by 10.00%, EBITDA grew by 10.90% and EPS growth rate is 13.70 %. CSX has positive returns (17.76% of ROE, 5.98% of ROA and 12.99% of ROC) and good Financial strength, rated 7/10. Returns are at top levels of both CSX’s History and Industry (better then 87% of competitors). The financial situation is not that healthy, with a Cash to Debt of 0.10, at Average levels of the CSX’s Industry but a very low level compared to CSX’s History, when the company has been even out of Debts.
PRIMECAP Management is the main holder of CSX with 0.34% of Shares Outstanding, followed by Sarah Ketterer (0.28%) and Steven Cohen (0.1%)
