Equifax (EFX): Better to find the “next” EquifaxBy Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 12/21/15 Sign up for Cabot Wealth Advisory—it’s free!
The easiest investment today is buying oil stocks, because they’re so cheap. It’s obvious!
Trouble is, what’s obvious seldom works in the market. Or, as Humphrey Neill put it in The Art of Contrary Thinking, “When everyone thinks alike, everyone is likely to be wrong.”
So I don’t recommend buying oil stocks here, unless you’ve got specific information on a particular stock that is a screaming bargain—and the stock’s action indicates growing support.
Alternatively, you should stick with strength, because as we all know, trends, once in effect, tend to continue.
Which brings me to Equifax (EFX).
The name Equifax is familiar to most Americans as one of the three credit-rating agencies. Understandably, as the world increasingly runs on credit, that business is quite healthy.
The company has grown revenues every year of the past decade except 2008, when revenues shrank by 11%. In the years since, revenues have grown 8%, 5%, 6%, 11% and 6%. It’s not rapid but it’s sufficient, and it’s fairly dependable.
It pays a 1.0% dividend.
And last month it acquired Australia’s leading credit bureau for $1.8 billion. The market definitely liked that news, because the stock hit record highs last week.
So, you could jump in and buy Equifax (EFX) now.
Even better, you could wait for a normal pullback.
But my advice is to buy the “next” Equifax (EFX).
You see, Equifax was originally recommended by Chloe Lutts Jensen in Cabot Dividend Investor back in April, when it was trading at 94. Her regular readers are now sitting on profits of 20%, and collecting regular dividends as well.
Chloe recommends three complete portfolios for her readers: “High Yield,” “Dividend Growth” and “Safe Income,” and readers are encouraged to mix and match, to build a diversified portfolio that’s tailored to their investment needs. Chances are, it would be good for you too!
For details, click here.
Cabot Stock of the Month
From Cabot Wealth Advisory 1/14/13 Sign up for free Cabot Wealth Advisory e-newsletter
On December 3, Equifax (EFX) announced it would acquire the credit services business of Computer Sciences Corp. for $1 billion, and investors cheered the deal, driving the stock up from 51 to 54 on very high volume (and proving Carlson very right in the process). It spent the rest of December consolidating that gain, but the first days of January saw it climbing again; last week it hit 56!
Short-term, a pullback is always possible, but long-term, we like EFX because of its dominant presence in the industry of consumer credit information. The company, with 25% of its business coming from outside the U.S., has great global growth potential. And with annual revenues of just $2 billion, the business can get a whole lot bigger.
Now, you could just buy EFX here and put it away for 10 years. My guess is that would work out pretty well. But ideally, you should get on board at a lower-risk entry point, and for guidance on that, you can hardly do better than to heed the recommendations of Mike Cintolo, who’s editor of Cabot’s flagship investment advisory, Cabot Market Letter.
1550 Peachtree Street NW
Atlanta, Georgia 30309
|Index Membership: N/A
Industry: Credit Services
Full Time Employees: 7,500
1/14/13 Equifax (EFX): Great global potential