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JohnCLeven (81.45)

5 yr avg returns on capital by sector

Recs

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December 27, 2012 – Comments (2) | RELATED TICKERS: PM , KO , SBUX

“Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return - even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you'll end up with one hell of a result.” – Charles Thomas Munger

I was playing with the google finance stock screener today and gathered this data as a result. The basic takeaway arn't surprising, but it's still cool to compare across sectors.

Consumer non-cyclicals dominated both categories by a significant margin. Consumer cyclical and tech also performed well. Health did very poorly on the overall avg (probably due to too many speculative biopharmas), however, health did very well when you isolate the top quartile. Transporation and utilties did the worst.

I hope someone finds this a tad interesting. Enjoy!

 

5yr average return on capital % 

Consumer non-cyclical 12.3%

Consumer cyclical 8.6%

Financial 8.5%

Tech 8.4%

Basic materials 7.5%

Services 7.4%

Energy 6.8%

Capital Goods 6.4%

Transporation 6.1%

Utilties 4.8%

Healthcare 0.58%

 

5yr avg return on capital % (among the top quartile of each sector)

Consumer non-cyclical 32.7%

Tech 22.3%

Healthcare 20.6%

Consumer cyclical 20.2% 

Services 20.0%

Fianacial 19.8%

Basic mats 19.5%

Cap goods 15.7%

Energy 15.0%

Transporation 14.8%

Utilties 8.4%

2 Comments – Post Your Own

#1) On December 27, 2012 at 1:38 PM, EnigmaDude (95.78) wrote:

very interesting indeed!  I'm surprised to see Energy at the low end of the spectrum but I suppose it is a capital intensive industry and perhaps 5 years is not a long enough period to look at.

What are some consumer non-cyclical stocks that have actually realized investment returns over the past 5 years that are close to the return on captial gains shown here?

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#2) On December 27, 2012 at 2:11 PM, JohnCLeven (81.45) wrote:

I should also add

1) This calculation is, according to google screener, "Most recent 5y Avg. Income After Taxes divided by the average (Total Long term Debt + Long term Liabilities + Shareholders Equity), expressed as a percentage"

2) I screened for a mkt cap over 1 billion.

Here are your top 25 consumer non cyclicals:

1. LO - 68%

2. MJN - 46%

3. HLF 36%

4. PM - 33%

5. CL - 31%

6. MNST - 28%

7. SAM - 22%

8. KO - 21%

9. ABV - 21

10. SBUX 20%

11. CALM 19%

12. LANC 19%

13. UN/UL 18%

14. BF.B 18%

15. CPB - 17%

16. PEP - 17%

17. CLX - 17%

18. NUS - 17%

19. AVP 17%

20. BTI - 16%

21 .HSY - 16%

22. EL - 15%

23. K - 15%

24. DEO - 15%

25. FMX - 14%

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