Due to depressed commodity prices I am finding a lot of value in energy suppliers that are hitting or nearing all time lows.
Each have their own sets of problems notwithstanding reduced revenue as a result of low gas and oil prices.
I’ll be publishing the results of my research and any new positions to the Share and Stock Markets website and portfolio in due course.
One thing I have come across during my research is the sheer differences in the quality of how companies prepare and publish accounts.
In some instances I find myself darting all over a set of results just to find out something that could easily have been placed front and centre under a heading such as ‘financial highlights’ and placed as a bulleted point.
Just a small gripe from me today but it got me to thinking whether or not there should be a more standardised way for listed companies to publish results.
Buying at 52 week or all time lows is something that I have been orientating towards for the last year as a way to protect myself from downside risk.
I’m mindful that nobody knows where the absolute low or high is of any stock.
But one of the things I’m finding is that in order to buy at 52 week or all time lows is that it is far far better that a listed company has had a long operational history.
I’m not talking decades or anything here but something at least leaning towards a good high/low price range over a number of years.
I find that companies that exhibit these characteristics are easier to value because I’m able to judge how well they have faired against the macro environment as well as any industry related issues they may have faced such as regulatory changes or in the current case low commodity prices.
As such my research has been mainly directed towards mid cap stocks.
Perhaps I’m suffering from a short-term psychological aversion to small cap stocks with no operating history and questionable accounting but I go where values are and at the moment they are in the energy sector.
I’ve also hardened my stance on the readability of accounts as part of the valuation process itself so if a company posts a set of accounts that are particularly difficult to decipher or they are hiding where earnings growth is truly coming from then they are an automatic bargepole.
Even though the FTSE 100 closed at a record 7022 last week, the search for value never stops.
Image: Molino Eolico