The HOLT team’s two health care companies were not automatically the first that come to mind in the sector. One was Waters Corp. (NYSE: WAT) with close to an $18 billion market cap and Globus Medical Inc. (NYSE: GMED) with less than a $5 billion market value.
Waters manufactures and sells analytical technologies used in liquid chromatography, mass spectrometry and thermal analysis. It has over 7,200 employees, operates in 27 countries with 11 manufacturing facilities and sells products/services into over 100 countries. Waters generated revenue of $2.4 billion in 2018 and has been a steady and continual grower of revenues.
Globus Medical, a medical device company by description, targets musculoskeletal implants in spine disorders. It has roughly 1,800 employees and sales of $713 million in 2018 might not be enough for Team Buffett to care about.
It is no secret that Buffett likes financial companies and making financial transactions. He is deep into insurance, deep into bank investments, and he also has acted as a lender of last resort when things go south. Marsh & McLennan Companies Inc. (NYSE: MMC), with nearly a $48 billion market cap, is one of the HOLT team’s picks, followed by Moody’s Corp. (NYSE: MCO) with a $35 billion market cap.
Marsh & McLennan generated revenues of about $15 billion in 2018 and is expected to see sustained growth of about 5% ahead. The company is into risk and insurance services and consulting services, with about 65,000 employees. The company recently took over Jardine Lloyd Thompson with more than 10,000 employees.
Moody’s should be no stranger to Buffett-watchers. After all, he has owned a large stake for years. That said, Buffett hasn’t gone out of his way to praise the model of charging debt issuing clients to evaluate them and assign credit ratings since the debacle of the Great Recession. The company’s 2018 revenue was $4.4 billion, and it employs about 13,000 people.
Energy and Materials
The HOLT team at Credit Suisse has two companies in energy and materials that might fit traditional Buffett screens, but they weren’t giant oil and gas leaders that he has invested in on and off over the years. One such company is Packaging Corp. of America (NYSE: PKG) with a $9.4 billion market cap, and the other was Valvoline Inc. (NYSE: VVV) with a $3.5 billion market cap.
Packaging Corp. of America makes and sells containerboard and corrugated packaging products like boxes and retail packaging and displays, and it has services around them. The business is considered to be highly cyclical: more packages being sent around the United States and elsewhere means more business, but it’s expected to see less packaging business when things slow down.
The company generated $7 billion in 2018 revenues, and it is expected to see low single-digit growth ahead. It has roughly 15,000 employees and dates back to the 1800s.
Valvoline makes and sells automotive maintenance products and services, which would be best known for its motor oils and engine fluids products. The company has about 6,700 employees and did about $2.3 billion in 2018 revenues, with sales continued to see expected modest growth of 4% to 5% ahead.
Some of the other companies from the 114 names are also household names. Here are just a few of the more easily identifiable ones listed by the Credit Suisse HOLT team:
- Bristol Myers Squibb
- Cardinal Health
- Dollar General
- Eastman Chemical
- General Dynamics
- Northern Trust
- Northrop Grumman
- State Street
- Universal Health Services
- Western Union
- W.W. Grainger
A final reminder: Credit Suisse is not calling these out as the next big “whale of a deal” acquisitions that Buffett will make. The team is just employing some of the same Buffett metrics in evaluating a company for ideas for investors to own in their own portfolios.
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