Thrifty 30 shortlist
To choose a new a company for the Thrifty 30 portfolio I create a shortlist of promising looking companies by screening the Sharelockholmes.com and Sharescope databases. These are the companies currently in the shortlist:
| Epic | Name | Sector | T30 |
| BBA | BBA AVIATION | INDUSTRIAL TRANSPORTATION | - |
| BBY | BALFOUR BEATTY | CONSTRUCTION AND MATERIALS | - |
| BLD | BULGARIAN LAND DEVELOPMENT | REAL ESTATE INVESTMENT AND SERVICES | - |
| BNZL | BUNZL | SUPPORT SERVICES | - |
| BOY | BODYCOTE | INDUSTRIAL ENGINEERING | - |
| BRAM | BRAMMER | SUPPORT SERVICES | - |
| BVS | BOVIS HOMES | HOUSEHOLD GOODS AND HOME CONSTRUCTION | - |
| CAO | CAMCO INTERNATIONAL | SUPPORT SERVICES | - |
| CCC | COMPUTACENTER | SOFTWARE AND COMPUTER SERVICES | - |
| CKSN | COOKSON GROUP | GENERAL INDUSTRIALS | - |
| CLLN | CARILLION | SUPPORT SERVICES | - |
| CRH | CRH | CONSTRUCTION AND MATERIALS | - |
| DVO | DEVRO | FOOD PRODUCERS | - |
| DVSG | DAVIS SERVICE GROUP | SUPPORT SERVICES | - |
| FBDU | FLYING BRANDS | GENERAL RETAILERS | - |
| FFY | FYFFES | FOOD PRODUCERS | - |
| GFRM | GALIFORM | SUPPORT SERVICES | - |
| GFTU | GRAFTON GROUP | SUPPORT SERVICES | - |
| GFTU | GRAFTON GROUP | SUPPORT SERVICES | - |
| GLB | GLANBIA | FOOD PRODUCERS | - |
| GLBS | GLOBUS MARITIME | INDUSTRIAL TRANSPORTATION | - |
| HDT | HOLDERS TECHNOLOGY | ELECTRONIC AND ELECTRICAL EQUIPMENT | T30 |
| HILS | HILL AND SMITH | INDUSTRIAL ENGINEERING | - |
| HYD | HYDRO INTERNATIONAL | INDUSTRIAL ENGINEERING | - |
| IMI | IMI | INDUSTRIAL ENGINEERING | - |
| INCH | INCHCAPE | GENERAL RETAILERS | - |
| IRV | INTERSERVE | SUPPORT SERVICES | - |
| JSG | JOHNSON SERVICE | SUPPORT SERVICES | - |
| KGP | KINGSPAN GROUP | CONSTRUCTION AND MATERIALS | - |
| KLR | KELLER GROUP | CONSTRUCTION AND MATERIALS | - |
| KLR | KELLER GROUP | CONSTRUCTION AND MATERIALS | - |
| LOOK | LOOKERS | GENERAL RETAILERS | - |
| LVD | LAVENDON GROUP | SUPPORT SERVICES | - |
| MACF | MACFARLANE | GENERAL INDUSTRIALS | - |
| MCGN | MICROGEN | SOFTWARE AND COMPUTER SERVICES | - |
| MLIN | MOLINS | INDUSTRIAL ENGINEERING | - |
| MWE | MTI WIRELESS EDGE | TECHNOLOGY HARDWARE AND EQUIPMENT | - |
| NEX | NATIONAL EXPRESS | TRAVEL AND LEISURE | - |
| NSR | NESTOR HEALTHCARE | HEALTH CARE EQUIPMENT AND SERVICES | - |
| PFD | PREMIER FOODS | FOOD PRODUCERS | - |
| PSN | PERSIMMON | HOUSEHOLD GOODS AND HOME CONSTRUCTION | - |
| REX | REXAM | GENERAL INDUSTRIALS | - |
| RPS | RPS GROUP | SUPPORT SERVICES | - |
| SDM | STADIUM GROUP | ELECTRONIC AND ELECTRICAL EQUIPMENT | - |
| SNR | SENIOR | AEROSPACE AND DEFENSE | - |
| TOMK | TOMKINS | GENERAL INDUSTRIALS | - |
| TPK | TRAVIS PERKINS | SUPPORT SERVICES | - |
| TW. | TAYLOR WIMPEY | HOUSEHOLD GOODS AND HOME CONSTRUCTION | - |
| ULVR | UNILEVER | FOOD PRODUCERS | - |
| VTC | VITEC GROUP | LEISURE GOODS | - |
| WSH | WSP GROUP | SUPPORT SERVICES | - |
| XPP | XP POWER | ELECTRONIC AND ELECTRICAL EQUIPMENT | - |
| XPT | XPLOITE | SOFTWARE AND COMPUTER SERVICES | - |
Holders Technology is already in the Thrifty 30 but it has recently published its results, so it’s up for re-evaluation.
Generally, the screens find companies that are cheap, profitable, and financially strong but to confirm their suitability for I check the annual reports (see About the Thrifty 30).
Some of the screening criteria:
10year PE
It’s easy to get carried away by a company’s prospects and pay too much for a share, reducing the return. The Price earnings ratio compares the price of shares to the profits (earnings) of the company. In theory, because profits belong to shareholders and will be returned to them as dividends or invested in their company to produce more profit in future, the more profit for every pound invested, the better the investment. Since a single year of profit may not be representative of a typical year, because companies have good years and bad years, I use the average of the past ten years of earnings to calculate the 10 year PE. Academic research indicates it’s a better measure of value and by restricting the Thrifty 30 to companies with 10 year PE ratios of less than 20, I’m protecting it from the most expensive shares in the stockmarket.
F_Score
Piotroski’s F_Score is a measure of financial strength, like a credit score. It rates companies highly if they are profitable, profitability is improving, they are paying off debt, consuming less cash as they operate and relying on their own profits to fund their business. Needless to say, unprofitable companies raising funds from creditors or shareholders score less well. Statistically companies with low F_Scores are more likely to go bust, and earn investors lower returns. By restricting the Thrifty 30 to companies with F_Scores of five or more out of nine, I’m protecting the Thrifty 30 from the weakest companies in the stockmarket.
Equity:Assets
Graham Gearing is a blunter measure of financial strength. It compares what the company owns (its total assets) to what it owes (its liabilities – bank debt, pension liabilities and so on). I named it after Benjamin Graham, who invented the measure. Graham thought companies that owned more than twice what they owed (total liabilities are less than half of total assets) were financially strong.
