Tuesday August 21, 2012
by David Fried, editor The Buyback Letter
Our buyback model portfolio has beaten the S&P 500 by more than 45% since its inception in 2000.
Here's a look at three of the latest stocks to be added to this model portfolio: HCA Holdings (HCA), Ingersoll-Rand Company Limited (IR), and NeuStar (NSR).
HCA Holdings is one of the nation’s biggest hospital chains. The Nashville-based company owns, manages, or operates hospitals, diagnostic and imaging centers, radiation and oncology therapy centers, and rehabilitation and physical therapy centers.
It earned $391 million in profit in the second quarter of 2012, the company announced Aug. 6. Revenues increased 11.9% to $8.112 billion. Net income totaled $391 million, or $0.85 per diluted share.
Adjusted EBITDA increased 10.5% to $1.569 billion; cash flows from operations increased 95% percent to $1.460 billion. Management has reduced shares outstanding by 14.9% in the last 12 months.
New Jersey-based Ingersoll-Rand, a leading diversified industrial firm, has a family of industrial and commercial brands such as Club Car golf cars, Hussmann refrigeration equipment, Schlage locks, Thermo King transport temperature-control equipment and Trane air conditioning.
With 64,000 employees, it conducts manufacturing and assembly operations in 47 plants in the U.S., 28 plants in Europe, 18 plants in Asia, 10 plants in Latin America and 1 plant in Canada.
IR has a market cap of $13.13 billion and a P/E ratio of 17.2. Analysts praise the company in several areas -- compelling growth in net income, solid stock price performance, impressive record of earnings per share growth.
It also has a largely solid financial position with reasonable debt levels by most measures and notable return on equity. In the last 12 months, management has reduced shares outstanding by 9%.
Sterling, Va.-based NeuStar provides call routing, database infrastructure and network management services to telecom carriers and other clients in North America.
NeuStar gets more than 60% of revenue from routing and managing phone calls and text messages for all the major U.S. telecom service providers through a contract with NPAC (National Portability Administration Center). The contract ends in mid-2015 and is up for renewal in 2013.
In November, NeuStar acquired Targus Information, a provider of caller identification services, for $560 million in cash. The TargusInfo deal will pay off in the long run, analysts says.
NeuStar said Q2 adjusted earnings rose 47% from the year-earlier period, to 75 cents. Revenue rose 40% to $206.5 million. Analysts had estimated NeuStar would earn 68 cents a share.
NeuStar raised its full-year outlook, and now expects 2012 earnings per share of $2.78-$2.90 and revenue of about $830 million. It had EPS of $1.90 on sales of $620 million last year. Management has reduced shares outstanding by 9.9% in the last 12 months.
Learn more about this financial newsletter at David Fried's The Buyback Letter.