Watchlist Update - November 2022

Most companies that I profile on this substack and deem to be ‘wonderful’ are too expensive for my cheap standards. So, I add it to list, watch and wait for it to get cheap.

In terms of valuation, I am looking for the company to be at a discount to where it has traded in the last five years. Additionally, I’m looking for a high absolute free cash & shareholder yield.

Most ‘wonderful’ companies tend to trade in a range of price/sales multiples. I attempt to capture these firms at the low end of that range.

When one of them hits an attractive valuation, I do another dive into the company and see if anything has changed with the economics of the business & the moat.

If nothing has changed and it’s just a matter of flows, macro jitters, or a temporary business problem, then I buy and wait.

My watchlist is below with current valuations compared to their 5 year averages.

Highlighted companies are stocks I already own. The blue ones are stocks I’m watching. I periodically update my watchlist to see where things are trading to make buy & sell decisions.