When Warren Buffett, a guru I emulate on Validea, purchased his first shares of GEICO back in 1951, there were no funny commercials or talking lizard mascots to entice him. It was Buffett’s limitless curiosity about the company’s then-chairman Benjamin Grahamone of Buffett’s professors at Columbia University as well as his mentor and “hero”–that led Buffett to visit Washington DC on a cold Saturday morning to visit what was then the General Employees Insurance Company.
After spending several hours with GEICO executive Lorimer “Davy” Davidson, Buffett’s interest peaked regarding the insurance industry and GEICO’s predecessor in particular. In fact, the company was one of Buffett’s earliest investmentshe purchased 350 shares at a multiple of about 8 times earnings. Given the market PE at the time (around 15), that was a good deal, but a steal given the current market PE of 24.
Today’s robust market includes few companies with low P/E ratios, but there ar e some. In fact, one of the stock screening models I created for Validea was inspired by the legendary investor John Neff, who managed Vanguard’s Windsor Fund from 1964 to 1995. For Neff, the P/E ratio (a stock’s per-share price divided by per-share earnings) was also a measure of what level of growth investors are expecting from a company in the future. The expectation factor was paramount for Neff, who found that high-flying growth stocks with high P/Es were very sensitive to any disappointment compared to expectations. Low P/E stocks, he found, had fewer expectations built into their pricing, so there was substantial upside if performance beat expectations but little downside if the opposite occurredsince Wall Street had already written them off. According to Neff, “If you buy stocks when they are out of favor and unloved, and sell them into strength when other investors recognize their merits, you’ll often go home with handsome gains.”
Top Warren Buffett Stock s To Buy Right Now: Golden Star Resources Ltd(GSS)
- [By Cameron Saucier]
Golden Star (NYSEMKT: GSS) is a gold mining and exploration company, and operates gold mines in Ghana, West Africa. GSS is up 396% YTD after it announced in July that it had begun pre-commercial production of gold in an underground mine in Ghana. GSS is trading at $0.825 per share on Monday intraday.
Top Warren Buffett Stocks To Buy Right Now: URS Corporation(URS)
- [By Ben Levisohn]
Fidelty’s John Mirshekaritook a look at URS(URS) today at the Value Investing Congress.His takeaway: The stock could double in two years.
Agence France-Presse/Getty Images
His analysis started with URS’s use of its free cash. During the past, it hasn’t been pretty. They spent 6.3 billion on eight acquisitions, they’ve bought companies at valuations higher than own stock and return-on-equity has dropped from high teens to just 6%.
The problem hasn’t been its business: Its return on tangible capital is 17%. Instead, the problem is that its management hasn’t maximized value through capital allocation. URS has lowest valuation: 9x 2013 cash earnings in its industry.
Part of the problem: Management incentives are based on net income. This year, however, relative total shareholder return was added., something Mirshekari calls”a step in the right direction.” In May, URS filed an amended proxy which says it will look to change incentives from net income to return on equity and earnings per share. More importantly, it said acquisitions would end.
If all goes right, URS could double in two years,Mirshekari says, comparing it to AECOM Technology (ACM).
Looks a lot like AECOMM, which did something similar and rallied.
- [By Ian Wyatt, Publisher & Chief Investment Strategist, Wyatt Investment Research]
Fund manager John Mirshekari, of the Fidelity Low-Priced Stock Fund, recommended shares of URS (URS), an engineering and construction contractor.
Top Warren Buffett Stocks To Buy Right Now: JP Energy Partners LP(JPEP)
- [By WWW.GURUFOCUS.COM]
For the details of ArcLight Capital Partners, LLC’s stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=ArcLight+Capital+Partners%2C+LLC
These are the top 5 holdings of ArcLight Capital Partners, LLCEnable Midstream Partners LP (ENBL) – 43,585,926 shares, 67.58% of the total portfolio. American Midstream Partners LP (AMID) – 13,977,709 shares, 19.28% of the total portfolio. Shares added by 230.89%TransMontaigne Partners LP (TLP) – 3,166,704 shares, 13.14% of the total portfolio. JP Energy Partners LP (JPEP) – 0 shares, 0% of the total portfolio. Shares reduced by 10000%Added: Am
Top Warren Buffett Stocks To Buy Right Now: CDI Corporation(CDI)
- [By Lisa Levin]
Shares of CDI Corp. (NYSE: CDI) got a boost, shooting up 32 percent to $8.20 as the company agreed to be acquired by AE Industrial Partners for $8.25 per share in cash.
Top Warren Buffett Stocks To Buy Right Now: Energy XXI Ltd.(EXXI)
- [By Lisa Levin]
Shares of Energy XXI Ltd (NASDAQ: EXXI) were down 72 percent to $0.181 after the company announced that it and some of its subsidiaries have entered into a Restructuring Support Agreement (RSA) with holders of more than 63 percent of its secured second lien 11.0 percent notes. Energy XXI added that in order to implement the terms of the RSA, it has commenced cases under Chapter 11 of the Bankruptcy Code.