Super-Hero Investments
Just thought I’d share an interesting email:
Jim Grant noted in his recent Interest Rate Observer that eight blue-chip companies now meet or exceed Ben Graham’s
strictest criteria for defensive investors: Pfizer, Nucor, Cooper Industries, Cintas, Tiffany, Archer Daniels Midland, Molex, and RadioShack.
These are like superhero investments. Each has
- 10 consecutive years of net profits
- 20 consecutive years of uninterrupted dividend payments
- earnings growth in the past decade of at least 33%
- price-to-earnings and price-to-book multiples of less than 15
For perspective, Grant notes that at the bottom of the Nasdaq bust in 2003, only two stocks met all those criteria. At the bottom of the market in 1991, only six qualified. (Since 1991, those six produced average annual returns of almost 19%.) If you bought just these eight stocks and forgot about them for a decade, chances are better than 90% you’ll make a substantial return and beat the market. Usually, that’s a lot harder to do.
Note: These, are not my personal recommendations to buy. Do your own Due Diligence.
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January 20th, 2009 at 2:43 pm
I always love investing tips. This one doesn’t seem half bad. I think I am going to have to check it out. Haven’t read that book before, I wish he had a website.
Thanks for the tip.
January 24th, 2009 at 11:51 am
Tiffany? Radio Shack? Perhaps the fact that I’m scared of touching these economically sensitive, consumer discretionary businesses with a ten foot pole makes them attractive from a contrarian standpoint. I’m surprised that they have consistent earnings growth. I think I’d rather stick to companies with more durable, repeatable business models and good dividend yield/growth. In that vain, Pfizer seems like a good choice.
January 25th, 2009 at 3:31 am
[...] Living Off Dividends & Passive Income presented Super-Hero Investments [...]
January 25th, 2009 at 9:58 pm
i’m with nate. i’m not touching tiffany’s.
April 22nd, 2009 at 10:46 am
[...] January 20, 2009 — Super-Hero Investments [...]