"I like to go for cinches. I like to shoot fish in a
barrel. But I like to do it after the water has run out."
-- Warren Buffett
History seems to show that
good investingdoesn't necessarily mean picking out
complex situations and basing your investment thesis on
Nobel-level math. In fact, as the current financial crisis
has shown us, too much complexity can often
end in calamity.
In an effort to track down companies that may fall into
that "fish in a barrel" category, I've turned to the
Motley Fool CAPS community. Using CAPS' stock screener, I
looked for companies that have a price-to-earnings ratio
below 15, a long-term debt-to-equity ratio below 50%, a
return on equity above 10%, and a high rating from the CAPS
community.
Company
CAPS Rating
(out of 5)
Price-to-Earnings Ratio
Return on Equity
Long-Term Debt-to-Equity Ratio
Sasol (NYSE: SSL)
*****
12.2
16.3%
16%
Raytheon (NYSE: RTN)
****
10.5
19.2%
24%
American Oriental
Bioengineering (NYSE: AOB)
*****
7.9
12.4%
31%
Source: CAPS.
These are just three of the results that the CAPS screener
spit out; you can
run the same screenyourself to see the rest. While the
three companies above aren't meant to be formal
recommendations, they are a good starting point for further
research. And on that note, let's take a closer look.
Forward-looking fuel
The obvious downside to Sasol's business lately is that
the market for oil and gas hasn't been kind to producers,
including competitors
ExxonMobil (NYSE: XOM) and
Chevron (NYSE: CVX). For the fiscal year
ended June 30, it announced a 39% decline in earnings versus
the previous year. Continued... |