A tiny compounder portfolio
I did well in my Greenblatt-esque Fantasy Fund, back when the Fantasy Funds were available. I figured if Stockopedia was to resurrect the idea I'd see if quality companies might be a good idea.
There's been some discussion about compounders lately. I figured I'd share a list of 6 as a mini-portfolio. I own all of the shares listed below. So they're not just crapshoot stocks. Here they are:
- Computacenter (LON:CCC) 2378p
- Cranswick (LON:CWK) 3310p
- IG group (LON:IGG) 700p
- Macfarlane (LON:MACF) 107p
- Oakley Capital Investments (LON:OCI) 468p
- Renew Holdings (LON:RNWH) 735p
You can verify for yourself that these are accurate bid prices, as given by Stockopedia. For reference, the FTSE All Share Index (FTSE:ASX) is 4228
You should assume an equal-weight of the portfolio. My plan is to revisit the portfolio in a year, assuming I remember.
Well, I don't really want to go through each of the holdings. The common thread with them is that they have good returns on capital, their FCF is higher than the preceding 5 years, and they have increased divvies at least 5% annually over the last 5 years on average. And they don't keep issuing shares.
To take a share at random, IGG has increased its net profits by 24% annually over the last 5 years. Its ROCE is 28%, and its dividends have risen 6.6% annually on average. Astonishingly, it is on a yield of 6.8%, a PE of 7, and a P/FCF of 5.
And well, without going through all the numbers, MACF is on a PE of 9.1, CCC on 14 (hardly a demanding ratio), CWK on 15, and RNWH on 12.
How much cheaper do you want this stuff anyway?
OCI is a little different. It's a PE (Private Equity) fund. It's on a PBV of 0.7, although that might be entirely accurate. Directors have made large top-ups recently, giving me confidence in likely future performance.
I reckon investors are in for a reasonable shout at these prices. Shall we see?
Wish me luck.Disclaimer
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3 comments
You can see the results here: https://www.stockopedia.com/co...
I like all these business propositions especially MCF
Macfarlane (LON:MACF) has been a wonderful little business. I was running a screen yesterday to look for consistent earnings growth winners, with good compound growth rates and MACF was one of the few that came up.
Look at its numbers in 2018 versus today.
50% larger biz in terms of sales, double the earnings per share, half the valuation.
If there were ever a biz that screamed "the uk is getting cheap" - MACF is surely the one.
It's never going to top the list of sexy growth stock winner, but it just executes so well year after year. Compounding does the trick. I wouldn't be surprised to see MACF rally 50%-70+ in the next market upswing. It could justify a 15x PE no probs imo.