“Why do Roman bridges historically last for a long, long time? Why did they last for a long time? The key reason was that the people who designed the bridges had to stand underneath it before the traffic went on. So they made sure there was a massive margin of safety. And bridges lasted for years and years and years. “
This is just one of the wise quotes from guru Prem Watsa (Trades, Portfolio), owner of Fairfax Financial Holdings, a fund with $1,545 Mil of Total Value with 43 Stocks on its portfolio.
According to Guru Focus list of stocks with Top Growth from Tem Watsa Portfolio, these are the top growing companies :
New Oriental Education & Technology Group Inc (EDU)
The company is a provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence.
Watsa started to buy EDU in Q3 of 2012 when he bought the bigger stake of 22,200 shares. Then he sold half stake in 2013 with no gain. In this moment he is holding 11,100 shares at an average price of $15.12.
EDU is currently trading at 15.60 P/E, against an average P/E of 43.30 of the Global Education & Training Services industry. This ratio is better then 85% of competitors. P/B ratio is 2.73 near the all-time low level. At current price level, Watsa is having a total average return of +31%.
Over the last 12 months the stock price dropped by 39% and the downward trend started on January 2014.
EDU has a Profitability ratio of 8/10 and is outperforming its sector, with a ROE of 19.00% (Industry median of 9.30), a ROA of 12.32% (Industry median of 4.85%).
Over the last five years the Revenue grew by 30%, EBITDA by 25.90%, EPS by 23.30%. All ratios are growing at a double digit rate better then 92% of competitors
The DCF model gives a fair value of 36.15$ with a Margin of Safety of 45%, the Peter Lynch Value gives a Margin of Safety of 27% and the Guru Focus Fair Value Votes give a Margin of Safety of 36% (8 total votes)
Dodge & Cox is the main holder of EDU with 4.12% of Outstanding Shares, followed by George Soros (1.64%) and Matthews China Fund (0.34%)
NewMarket Corp (NEU)
The company is a holding company which is the parent company of Afton Chemical Corporation, Ethyl Corporation, NewMarket Services Corporation and NewMarket Development Corporation.
Watsa started to trade NEU in Q3 of 2011 when the price was down 200% from current levels. He took some profits on the last years, and now he is holding 750 shares with a total average gain of 71%
NEU is currently trading at 25.80 P/E, at an average level of the Global Speciality Chemicals industry that has a P/E of 27.20. This ratio is better then 71% of competitors. P/B ratio is 14.14 at its all-time high.
Over the last 12 months the stock price rose by 30% and the current upward trend started on October 2014.
NEU has a Profitability ratio of 7/10 and is outperforming its sector, with a ROE of 45.95% (Industry median of 6.72%), a ROA of 18.21% (Industry median of 3.52%). These ratios are at all time highs.
Over the last five years the Revenue grew by 9.50%, EBITDA by 9.20%, EPS by 10.80%. All these growing ratios are better then 70% of competitors
The DCF model gives a fair value of 522.96$ with a Margin of Safety of 9%, while the Peter Lynch Value says the company is heavily overpriced. The Guru Focus Fair Value Votes says the company is fair valued at current prices.
Mario Gabelli is the main holder of NEU, followed by Jim Simons and Chuck Royce
Precision Castparts Corp (PCP)
The company is a manufacturer of complex metal components and products, provides high-quality investment castings, forgings and fasteners/fastener systems for critical aerospace and and power applications.
Watsa started to buy PCP in Q3 of 2014 and then doubled his stake the following quarter. Now he is holding 2,000 shares at an average price of 237.08$ with a total loss of 8%.
PCP is currently trading at 16.80 P/E, at an average level of the Global Metal Fabrication industry that has a P/E of 24.50. This ratio is better then 80% of competitors. P/B ratio is 2.64 at average level of history and industry sector.
Over the last 12 months the stock price dropped by 15% and the current downward trend started on June 2014.
PCP has a Profitability ratio of 8/10 and is outperforming its sector, with a ROE of 16.30% (Industry median of 7.63%), a ROA of 9.83% (Industry median of 3.71%). These ratios are at an average level of history.
Over the last 5 years the Revenue grew by 14.40%, EBITDA by 16.60%, EPS by 16.90%. All these growing ratios are better then 91% of competitors
The DCF model gives a fair value of 358.2$ with a Margin of Safety of 39%, while the Peter Lynch Value and the Guru Focus Fair Value says the company is fairly valued.
The top guru holding PCP is Ruane Cunniff with 2.17% of Outstanding Shares, followed by Warren Buffett (2%), Jeremy Grantham (0.57%) and Mario Gabelli (0.5%)
