5 Companies that Look Attractive in March 2012
0.31%March 26 | MyPlanIQ portfolio symbol P_36844

We continue to look for ideas to help build long term selections for retirement. The majority of ETFs are indexed so there is no selection and we use that as a benchmark to compare with stock selections. By and large the dividend bearing ETF portfolios do pretty well so it is a good comparison.

Today we pick up on an aricle by
Morgan Housel of the Motley Fool presents five attractive companies based on the Enterprise/Unlevered Free Cash Flow ratio.

We have covered this before but a brief recap:

  • Enterprise value market capitalization (share price x shares outstanding) plus total debt and minority interests, minus cash
  • Unlevered cash flow< with interest paid on outstanding debt added back in

The ratio of these two statistics provides a valuation metric that takes into consideration allproviders of capital -- both stockholders and bondholders as focusing on profits and equity alone can be misleading.

Using this metric, here are five companies that Morgan found attractive.

Company

Enterprise Value/ Unlevered FCF

5-Year Average

 

Oracle (ORCL) 11.2 15.7
Microsoft (MSFT) 11.1 14.4
Bristol-Myers Squibb( BMY) 10.0 16.5
UnitedHealth (UNH) 10.0 10.6
Hewlett-Packard (HPQ) 8.8 15.0

Source: S&P Capital IQ.

This is a list of well known names but probably too focused on tech and health. In any case, it will be interesting to measure against our dividend bearing ETF portfolio:

Return Calculator

Calculate Performance

Start date (MM/dd/yyyy)

End date   (MM/dd/yyyy)

Click here for interactive chart

Click here for comparison with other funds, portfolios or stocks

Rolling Returns

From 08/05/2005 to 03/26/2024, the worst annualized return of 3-year rolling returns is -5.25%.

From 08/05/2005 to 03/26/2024, the worst annualized return of 5-year rolling returns is 1%.

From 08/05/2005 to 03/26/2024, the worst annualized return of 10-year rolling returns is 9.67%.

Maximum Drawdown

Create a new model portfolio with personal personal risk profile for a brokerage account