This time last year Mirabaud Securities produced a list of the ten global companies they felt we should all avoid investing in at “virtually all times.” Over the year, the average share price of those ten companies fell by 29%.
The firm’s official buy list, on the other hand, is stuffed with stocks that are attractively valued, but which also have sound balance sheets and superior long term track records of growth and returns. That portfolio has beaten the market by around 15% in the last year.
This year, they have updated the ‘don’t touch with a barge pole’ list. How does a company get on it? By having a stock price that has lagged the index for ten years; having single digit EPS growth; poor returns on capital; bad dividend histories; and mediocre balance sheets.
Most of this year’s turn out to be “capital-intensive outfits operating in over-supplied cyclical industries characterised by mediocre pricing power”. Or a bank.
Air France-KLM (€4.1),
Deutsche Bank (€28),
Deutsche Telekom (€9.1),
Intesa SanPaolo (€1.2),
So now you know what not to buy. We’ll address the issue of what you should buy once again in the new year.