For many investors, the current investment climate is bizarre and new lockdown rules are not well received for investments as well as consumption. For this reason, ‘online’ companies are still in high favour (although stagnated a bit recently) and many other firms, for instance, that need factories to actually manufacture a physical product, are out of favour.
Since the dawn of this blog, focus has always been on value; speculation or lofty promises have been tried to be avoided. So far, the results have been mediocre at best and at the beginning of this year, it was rather difficult to find attractively valued shares – a situation that has changed completely with lots of long-term opportunities available now. Some of the investments discussed on this blog have performed rather well, while others have gotten much cheaper and most of them show a better risk/reward situation than at initiation.
It is imperative to think about current macrotrends; however not to get too much drifted away by it but rather look at each company individually and assess its future earnings potential. Most of the companies discussed in this blog have a history dating back decades and so far always found a way to weather challenging storms.
Let’s look at some current announcements:
-Alaris Debenture: At the beginning of October, Alaris said that despite the difficult environment the majority of its partner’s results have been better than expected. The stock price has been stable over the last months, which is a good sign for the debenture holders, that enjoyed a small increase in the price of the debentures. Next week, Alaris will provide its Q3 results for more details.
-Altria: Altria reported its Q3 numbers with an increase in the smokeable and oral tobacco segment of 9.1% versus last year’s quarter. Furthermore, actual EPS for the quarter and full year EPS are showing positive trends. The company depicts a current dividend yield of more than 9% which is fully covered by free cash flow. Where else can such yields be obtained?
-Fresenius: Fresenius’ quarterly update demonstrated its resilient business model and sales grew by 1% (5% in constant currencies). Guidance was confirmed and the company’s valuation remains cheap.
-Hunting: The firm’s cash position increased to £69 million, whereas inventories are down. All in all, the asset play case is still in place with the current share price trading lower than its cash plus inventory position.
-BIC Group: BIC reported strong operating cash flow generation resulting in a net cash position of €128 million. A good recovery was visible especially in the lighters business. And btw, BIC also has online shops leading to an increase in e-commerce sales of 15% ytd.
While the last decade was pretty much a lost decade for value investors and was very favourable to technology or growth companies, the economics for value investors for the next decade show tremendous possibilities. Stay tuned and don’t lose patience – good things come to those who wait.
