In light of the ongoing U.S.-China trade war and the G-7 Summit in France, GuruFocus’ Buffett-Munger Screener offers good investing opportunities around the globe.
Dow rebounds from last week’s tumble on renewed trade deal hopes
The Dow Jones Industrial Average closed at 25,898.83 on Monday, up 269.93 points from last Friday’s close of 25,628.90. Despite this, the Dow is still down a net 357.92 points since last Thursday’s close of 26,256.75 on the heels of President Trump’s latest threats to increase tariffs on Chinese goods. Last Friday, top Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) holding Apple Inc. (AAPL, Financial) tumbled to $202.64, the lowest close for the week.
Trump tweeted last Friday that the U.S. will increase the existing tariff on $250 billion worth of Chinese goods from 25% to 30% on Oct. 1. Additionally, the tariff for the portion of the $300 billion of goods due to be hit with tariffs on Sept. 1 will increase from 10% to 15%. Trump’s latest tariff threats are in retaliation of China’s announcement it will levy taxes on $75 million worth of U.S. imports.
However, markets gained back some of Friday’s losses as Trump then said during the Summit, which lasted from Saturday to Monday, that China has called top U.S. trade people to “get back to the trading table.” Further, Trump said Monday morning in a joint press conference with French President Emmanuel Macron that he believes the Chinese “want to do a deal,” adding that Trump is “not sure they have a choice.” Despite China debunking such calls, the president's comments engendered positive sentiment to the U.S. market in hopes of a trade deal.
Buffett-Munger strategy identifies good investing opportunities
Berkshire leaders Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) have listed four key investing criteria when selecting good companies at fair prices: understandable business, predictable earnings, strong economic moat and attractive intrinsic value. Buffett-Munger companies are those that have a GuruFocus business predictability rank of at least four stars, incur little debt when growing their business, and trade at a reasonable price-earnings-to-growth ratio.
GuruFocus Premium members have access to all our popular value screens, including the All-in-one Screener that allows users to customize their own investing strategy. Table 1 lists the number of stocks making our popular value screens as of Monday, which include the Benjamin Graham Net-net Screen, the Undervalued-Predictable Screen and the Buffett-Munger Screen.
| Screener | USA | Asia | Europe | Canada | UK/Ireland | Oceania | Latin America | Africa | India |
| Graham Net-Net | 114 | 505 | 210 | 45 | 61 | 15 | 8 | 14 | 51 |
| Undervalued Predictable | 61 | 79 | 142 | 8 | 57 | 3 | 55 | 7 | 10 |
| Buffett-Munger | 31 | 103 | 82 | 3 | 31 | 0 | 23 | 5 | 36 |
Table 1
GuruFocus offers several subscription regions, including the U.S., Asia, Europe, Canada, the U.K., Oceania, Latin America, Africa and India. The top Buffett-Munger stock in each region is as follows:
- U.S.: Alliance Data Systems Corp. (ADS, Financial)
- Asia: Youyuan International Holdings Ltd. (HKSE:02268, Financial)
- Europe: Eregli Demir Ve Celik Fabrikalari TAS (IST:EREGL, Financial)
- Canada: Winpak Ltd. (TSX:WPK)
- UK / Ireland: Gazprom Neft PJSC (LSE:GAZ)
- Oceania: None.
- Latin America: Southwest Airlines Co. (MEX:LUV)(LUV, Financial)
- Africa: Combined Motor Holdings Ltd. (JSE:CMH)
- India: Hindustan Housing Co. Ltd. (BOM:509650)
Alliance Data Systems
Plano-based Alliance Data provides marketing, loyalty program and private-label credit card services. GuruFocus ranks Alliance Data’s profitability 8 out of 10 on several positive signs, which include a five-star business predictability rank and a return on equity that outperforms 92.21% of global competitors.
Despite strong profitability, Alliance Data’s financial strength ranks a poor 4 out of 10 on weak interest coverage and Altman Z-scores.
Gurus with large holdings in Alliance Data include Jeff Ubben (Trades, Portfolio)’s ValueAct and Jerome Dodson (Trades, Portfolio)’s Parnassus Endeavor Fund (Trades, Portfolio).
Youyuan International Holdings
Youyuan, a Jinjiang, Fujian-based company, manufactures and sells wrapping tissue paper, commonly used in clothing, footwear, fruit and other consumer products. GuruFocus ranks the company’s profitability 8 out of 10 on several positive signs, which include a 4.5-star business predictability rank and operating margins that are near a 10-year high of 32.86% and outperforming 98.51% of global competitors.
Eregli Demir Ve Celik Fabrikalari TAS
Eregli Demir, a Turkish producer of steel, manufactures products like hot-rolled steel, cold-rolled steel, galvanized steel, metal packaging steel, billet and wire-rod. GuruFocus ranks the company’s profitability 9 out of 10 on several positive signs, which include profit margins that outperform over 93% of global competitors and a three-year revenue growth rate that outperforms 90.74% of global competitors. Additionally, the company’s business predictability ranks four stars out of five on consistent revenue and earnings growth over the past 10 years.
Winpak
Winnipeg, Manitoba-based Winpak manufactures and sells a variety of packaging materials and machines primarily for perishable foods, beverages and health care applications. GuruFocus ranks the company’s financial strength and profitability 9 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7, robust interest coverage and Altman Z-scores, and operating margins that are outperforming 93% of global competitors. Additionally, the website gives Winpak the predictability rank of 4.5 stars out of five.
Gurus riding Winpak’s profitability include the Leith Wheeler Canadian Equity (Trades, Portfolio) Fund and the CI Can Am Small Cap (Trades, Portfolio) Fund.
Gazprom
Gazprom, a Russian oil company that also trades on the London Stock Exchange, explores, develops, produces and sells crude oil and natural gas in two business segments: upstream and downstream. GuruFocus ranks Gazprom’s profitability 9 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7, expanding profit margins and a return on equity that outperforms 92.86% of global competitors. Additionally, the website gives Gazprom the predictability rank of four stars.
Southwest
According to the Buffett-Munger Screener, Dallas-based Southwest is the top stock on the list of Latin American stocks. The U.S. airline operates short-haul flights from a point-to-point network. As of second-quarter-end, Buffett’s conglomerate owns 53,629,213 shares of Southwest.
GuruFocus ranks Southwest’s financial strength 7 out of 10 on several positive indicators, which include a robust interest coverage ratio of 33.97, a ratio that outperforms 91.80% of global competitors. Southwest’s cash-to-debt ratio and debt-to-Ebitda ratio also outperform over 90% of global airlines.
Combined Motor
Durban, South Africa-based Combined Motor operates four business segments: retail motor, car hire, financial services and corporate services. GuruFocus ranks the company’s financial strength and profitability 7 out of 10 on several positive signs, which include a strong Altman Z-score of 4.81, consistent revenue growth, expanding operating margins and a return on equity that outperforms 92.39% of global competitors.
Hindustan Housing
Hindustan Housing, an Indian business services company, provides various types of administrative and allied services and facilities. According to GuruFocus data, the company’s profit margins are outperforming over 84% of global competitors, a sign of good profitability.
Disclosure: Author is long Alliance Data and Southwest.
Read more here:
- 6 Retail Companies Gurus Broadly Own
- 5 Dividend Growth Stocks to Consider in Light of Falling Treasury Yields
- 5 Stocks to Consider as US Narrows Scope of China Tariffs
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