Companies that Have Done What Congress Won't
Read more: http://community.nasdaq.com/News/2011-07/companies-that-have-done-what-congress-wont.aspx?storyid=87803#ixzz1TRlRsrY6
The U.S. debt ceiling talks are sputtering along, with the deadline for addressing the country's dwindling amount of available credit fast approaching and legislators bickering over how to address the problem.
By all accounts, the process has been painfully slow, with both sides proving to be better at political posturing than at legitimate compromise.
Perhaps they could learn something from Corporate America. While a myriad of companies went into the financial crisis of 2008 leveraged to the hilt, many have used the last three years to chip away at -- or, in some cases, altogether eliminate -- their high piles of debt. To be sure, they didn't have to deal with the same sort of political machinations that U.S. policymakers have to deal with. But they can nonetheless provide a bit of much-needed "get-it-done" inspiration -- not to mention good opportunities for investors.
In fact, in the decade-plus that I've been researching history's most successful investment strategies, the variable that has most often popped up is debt. Gurus like Peter Lynch, Warren Buffett, and Benjamin Graham all have used approaches that look for companies that don't stretch themselves too thin. With that in mind, I recently looked for companies that have lowered their debt load over the past three years -- and which also get high marks from my "Guru Strategies". The models are each based on the approach of a different investing great, including Lynch, Buffett, and Graham. I found about 20 firms that make the grade; here's a look at some of the best of the bunch.
USANA Health Sciences ( USNA ): Utah-based USANA ($440 million market cap) makes nutritional and personal care products that it sells to customers in the U.S., Canada, Australia, New Zealand, Mexico, the U.K., and a number of countries in Asia. Its subsidiary, BabyCare, Ltd., has a direct selling business in China.
USANA, which is a Federal Drug Administration-registered firm, has decreased its long-term debt/equity ratio from 110% three years ago to zero today, and it gets approval from my Warren Buffett- and Joel Greenblatt-based models. The Buffett approach looks for firms with a decade-long history of upping earnings per share; enough annual earnings that they could, if need be, use those earnings to pay off all long-term debt in less than five years; and high returns on equity (a sign of the "durable competitive advantage" Buffett is known to seek). USANA delivers on all fronts, having upped EPS in all but one year of the past decade, no long-term debt, and a 10-year average ROE of 35.2%, which more than doubles the model's 15% target.
By all accounts, the process has been painfully slow, with both sides proving to be better at political posturing than at legitimate compromise.
Perhaps they could learn something from Corporate America. While a myriad of companies went into the financial crisis of 2008 leveraged to the hilt, many have used the last three years to chip away at -- or, in some cases, altogether eliminate -- their high piles of debt. To be sure, they didn't have to deal with the same sort of political machinations that U.S. policymakers have to deal with. But they can nonetheless provide a bit of much-needed "get-it-done" inspiration -- not to mention good opportunities for investors.
In fact, in the decade-plus that I've been researching history's most successful investment strategies, the variable that has most often popped up is debt. Gurus like Peter Lynch, Warren Buffett, and Benjamin Graham all have used approaches that look for companies that don't stretch themselves too thin. With that in mind, I recently looked for companies that have lowered their debt load over the past three years -- and which also get high marks from my "Guru Strategies". The models are each based on the approach of a different investing great, including Lynch, Buffett, and Graham. I found about 20 firms that make the grade; here's a look at some of the best of the bunch.
USANA Health Sciences ( USNA ): Utah-based USANA ($440 million market cap) makes nutritional and personal care products that it sells to customers in the U.S., Canada, Australia, New Zealand, Mexico, the U.K., and a number of countries in Asia. Its subsidiary, BabyCare, Ltd., has a direct selling business in China.
USANA, which is a Federal Drug Administration-registered firm, has decreased its long-term debt/equity ratio from 110% three years ago to zero today, and it gets approval from my Warren Buffett- and Joel Greenblatt-based models. The Buffett approach looks for firms with a decade-long history of upping earnings per share; enough annual earnings that they could, if need be, use those earnings to pay off all long-term debt in less than five years; and high returns on equity (a sign of the "durable competitive advantage" Buffett is known to seek). USANA delivers on all fronts, having upped EPS in all but one year of the past decade, no long-term debt, and a 10-year average ROE of 35.2%, which more than doubles the model's 15% target.
Read more: http://community.nasdaq.com/News/2011-07/companies-that-have-done-what-congress-wont.aspx?storyid=87803#ixzz1TRlRsrY6
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