COST - My Favorite 4 Compounder Stocks: Updated Stock Price Targets For Q2 2024
2024-05-11 11:29:53 ET
Summary
- This article is an update of my 4 favorite steady compounder stocks' price targets from my February 2024 article after Q2 analyst earnings revisions.
- The list consists of Waste Management, Costco, Constellation Software and Coca-Cola Consolidated.
- The article covers some thoughts and topics around Gautam Baid's "The Joys of Compounding."
- All of these stocks have beaten the S&P 500 Total Return on a trailing 10 year basis.
Stocks that continue to compound
Back in February, I wrote an article that addressed my wish list of high-quality names that have compounded the top and bottom lines steadily for years. The list was comprised of 4 select names:
- Costco Wholesale Corp. (COST): At 870 retail warehouses, Costco is now the 3rd largest retailer worldwide. The company touched a 32 X multiple as its lowest "post-Covid" earnings multiple and that would seem about the best an investor could get in the next 5 years under the right set of circumstances.
- Waste Management (WM) is a waste management company that removes your trash, and recyclables, own and manage dumps. The moat in these kinds of companies is that it is very hard to establish new waste dumping facilities. Once a company like this is entrenched in a community, there is very little likelihood that a competitor could step into the picture. As population and consumption grow, so does waste. The price elasticity that consumers are willing to absorb for dumping their trash is very inelastic.
- Constellation Software Inc. (CNSWF): The Canadian company has over 50,000 employees considering their fully and partially owned stakes in numerous vertical market software companies. Similar to Berkshire Hathaway, this holdings company makes serial private acquisitions in their area of expertise. These software companies are often small and serve niche industries where their products are very sticky.
The company growth is inorganic for the most part but is very consistent with a holdings portfolio that now tops 500 companies.
- Coca-Cola Consolidated Inc. (COKE):This is not the household Coca-Cola, yet one of the largest bottling partners of the company. This is one of those, invest in the pipes rather than the product plays. According to the company, 86% of total sales volume is attributed to Coca-Cola products across 14 states. The company also bottles for Keurig Dr. Pepper ( KDP ) and Monster Energy ( MNST ).