As usual, here are the best investing ideas from the past few weeks:
Old Value School has one of the greatest collections of value-oriented screens on the web. These recent screens are modeled after Benjamin Graham, the father of value investing, and his legendary stock selection approach.
Jae has run numerous backtests on the criteria to come up with the 4-5 metrics that make a difference. These screens are a great source for investment ideas and further due diligence.
BYD is a well known investment by the most famous investor of them all, none other than Warren Buffet.
While many value investments are easy to spot based on a discount to net asset value or low P/B ratio’s, valuing companies like BYD with significant growth prospects is a much more complicated exercise.
It is a great example of backing out implied estimates for a number of different valuation metrics including DCF, Graham, NPV/EPV, and return on incremental equity.
Illiquid smallcap and microcap stocks often have the largest discrepancies between current stock price and the underlying intrinsic value of the business. For this reason, I rarely post analysis of well-known companies, as they usually have a depth of depth of coverage that prevents major price imbalances.
However, I came across this solid writeup of Wal-Mart Stores (WMT), a favorite large-cap stock for many value investors. The EV/EBIT chart is especially eye opening – by this metric, the stock hasn’t been this cheap since the 1980s!