From Cabot Wealth Advisory 10/21/13 Sign up for Cabot Wealth Advisory It's free!
I recently scoured my databases to find the best companies with low P/BV ratios. I found that 94 companies in my database of 1,000 companies have P/BV ratios of 1.20 or lower. I used several additional criteria to narrow the list of 94 companies by also requiring Standard & Poor’s Earnings/Dividend ratings of B or better, low price-to-earnings (P/E) ratios, dividend yields of 1.0% or higher and good earnings prospects for the next 12-month and five-year periods.
My search turned up one company with a fascinating 80-year history. The company endured tough times during the 2008 financial collapse. The company reinvented itself and is now gaining market share from its competitors. The stock price is currently a bargain and the company looks attractive to me.
Nissan Motor (NSANY), founded in 1933 and based in Tokyo, designs, produces and sells passenger cars and commercial vehicles in 190 countries. In March 1999, Nissan and Renault signed an alliance agreement and began setting up joint projects covering most of the activities of both companies. Nissan owns a 15% stake in Renault, and Renault holds 44% of Nissan's shares.
Nissan’s sales and earnings performance has been lackluster during the past several years, but management’s six-year business plan, announced in 2011, looks promising. Nissan plans to deliver an all-new vehicle every six weeks. The company's global portfolio will have 66 vehicles and will cover 92% of all markets and segments. Nissan's focus on sustainability will continue, including making zero-emission vehicles and using low-emission technologies.
Nissan sales declined 5% to $103 billion and EPS dipped 2% during the 12 months ended 6/30/13. More recent results indicate that Nissan’s sales will advance 9% and EPS will jump 24% during the next 12 months. Results will likely continue to improve in future years as the company rolls out new vehicles and expands into new markets. Sales in China are improving. European sales are showing positive signs of rebounding, too.
Nissan shares sell at 11.5 times current EPS and provide a decent 2.4% dividend yield. The stock price sells at a 7% discount to its book value, which is outstanding. Shares will likely reach my Min Sell Price of 30.42 within one to two years.
Click here to follow Nissan and other first-rate, high-quality companies in Cabot Benjamin Graham Value Investor.
|Nissan Motor (NSANY)
1-1, Takashima 1-chome
Yokohama-shi, 220-8686 Japan
81 4 5523 5523
|Index Membership: N/A
Full Time Employees: 160,530