Since 2011, Lockheed Martin has been compounding at a rate of 30% per year. It has beaten the S&P 500 by over fifteen points annually over that time frame. It is one of my greatest personal investment acts of omission to ignore it when it caught my attention in the $80s as it now trades around $240 per share for a solid tripling in the course of five years (plus the dividend got jacked up.) The reason why the stock prices of Lockheed and other defense manufacturers got so low in 2011 is that there was a strong political dialogue in the United States calling for the curtailment of aerospace and weaponry defense spending.
The defense sector as a whole traded at its lowest valuation since 1991, and investors that scooped up shares in Lockheed Martin and some other defense firms ended up generating some of the best five-year total … Read the rest of this article!
One of the weird quirks that is necessarily associated with being a successful value investor is that attractive entry points are nearly always caused by the aftermath of a stock reporting some business conditions or adverse event that render it unfashionable. In other words, the “value” you find is almost always a direct result of concluding that the rest of the investor community is over-weighing the effects some business impairment will have on the firm’s long-term earnings and valuation.
During the past few years, Wal-Mart ran into the gravitational pull of large numbers as it struggled to grow its revenues that hover near the half a trillion mark (the high water point was $485 trillion in 2014).
The prospect of low earnings growth pushed the price of Wal-Mart’s stock down low into the $50s in 2014 and 2015. Meanwhile, earnings were about $4.50. This meant that, for most of 2015, … Read the rest of this article!