What’s thrifty now?

Mined that seam

Screens throw up opportunities, but mine are becoming clogged with companies that I’ve rejected and companies that I’ve added to the Thrifty 30 portfolio so from this month I’m striking those companies out with a coloured bar: green for additions, red for rejects.

What’s left in my Bargain and Thrifty screens is the white space, filled mostly by two types of business I’m trying to avoid:

1. Financially complex companies in markets that have experienced decades long bull markets but are now experiencing more difficult conditions, like house builders, miners and (obliquely) boutique investment banks. Their performance is, to a great extent, out of their control, because profitability depends on price levels (for property, commodities, the stock market) that could be falling or subdued for a very long time – beyond my five year horizon. That’s what I concluded about shipping too, which I’d put in the same category.
2. Companies like motor retailer Caffyns and Avesco, a supplier of equipment and services for corporate events, that, according to the data, have earned such consistently weak returns in the past it’s difficult to imagine them doing anything different in the future.

In among these a genuine bargain might lie, but I feel as though I’m getting diminishing returns from upper reaches of these lists. I may have picked what I can from them.

Nifty-wise, the list looks more promising. There are miners in the Nifty list too, but also UTV,  Chime, National Express, Jacques Vert and Mears. These companies have been very profitable for a decade and seem comparatively cheap. The question is whether there is a good chance profits in future will be similar or better.

At current prices, it seems the market is betting they won’t be.

I’m cautious about retailers and media companies, but wouldn’t rule out investing in Jacques Vert, radio and TV broadcaster UTV and public relations company Chime, without at least finding out more about them. Operating coaches and trains (National Express), and social care and household maintenance and repair (Mears) seem like suitably prosaic industries.

But I’ve got a soft spot for companies with chequered pasts, and in addition to these Nifty candidates, I think I need to look mare carefully for bargains. I have two options, to look further down the Thrifty list, or invent a different one.

In the now famous words of Peter Cundill, sometimes it’s hard to find bargains, but there’s always something to do…