3 Long Ideas From Acadian Asset Management's Top Buys
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Acadian Asset Management is an investment advisory and hedge fund management firm with ~$12 billion invested in equities. The firm recently filed its 13F form with the SEC. Here’s a list of its top three buys from the last quarter:
TJX is trading at a forward PE of 14.60. Its expected EPS for the current year is $2.48, and next year it's $2.79. The company is expected to post top line growth of 10.10% in the current year and 6.00% next year.
TJXis a discount retailer. The company only posted negative same store sales one year in its 30-year long history. TJX has solid top line and bottom line prospects going forward as well.
From the top line perspective, TJX is benefitting from the recent mess at JC Penney. In addition, the company’s increased focus on advertising is helping it drive additional traffic to its stores. Further, in addition to market share gain prospects in the US, TJX has significant growth opportunity in Europe as well. The company currently has 338 stores in Europe and can more than double the store count over time.
The company’s bottom line prospects also looks good, and there is significant margin expansion potential going forward. The two businesses that will see the most margin improvements would be European business (as it reaches scale) and the Marmaxx business. The company is trading at a discount to its retail peers like Ross Stores, which I believe is not justified given the company’s strong prospects and hence will recommend buying it.
Grupo Televisa is Mexico’s biggest media conglomerate, and is trading at a forward P/E of 16.78. Its expected EPS for the current year is $1.11, and next year it's $1.35. The company is expected to post top line growth of 5.10% in the current year and 8.40% next year. Although the company is facing some EPS headwinds because of its ongoing investments in Lusacell, I believe it will be a long term positive as it will help the company capture part of the mobile market and increase its customer base. The stock looks cheap at its current PE given its expected 20% plus growth from the current year to the next.
Tesoro Corporation is trading at a forward P/E of 6.85. Its expected EPS for the current year is 6.74 and next year it's 5.49. The company’s top line is expected to grow 5.80% in the current year and decline 2.70% next year. Tesoro is likely to benefit from increased spread in Rockies and widened Bakken differentials in the near term. In the long term, the company will see EPS accretion as a number of its projects (like 10Kb/day expansion in its Mandan, ND refinery) go live. Although the stock has performed well in 2012 YTD, I continue to see further upside and hence recommend buying it.
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