Earnings season steps up a notch this week with results from companies including Bank of America, Goldman Sachs, Netflix and Tesla, before third-quarter results are dumped en masse next week.
Jensen says it will only invest in companies that have achieved a 15% return on equity, every year, for at least 10 consecutive years. “The figure can be inflated when companies carry a lot of debt in their capital structure and can rise and fall over the sales cycle even if the fortunes of the business itself are constant.
Which companies do? The Jensen team highlight Broadridge BR, -1.95%, an investor communications and trade processing company that it owns. “Broadridge has unrivaled access to investors, processing around 80% of proxy votes in North America. This competitive advantage would be difficult for a challenger to overcome. The company is also relatively unaffected by market cycles, as its 98% client retention rate generates strong recurring revenues,” they say.
Granted, that means it missed out on Nvidia’s NVDA, -3.16% stellar returns. “Nvidia has benefited from the considerable hype around artificial intelligence this year, and an investor skillful or lucky enough to buy that stock at the start of 2023 will have seen the position deliver a return of 194% through the end of May. Some investors will certainly have made a lot of money doing that, but it is difficult to build a strategy out of such trades,” they add.
The economics calendar for Monday features the Empire State manufacturing index at 8:30 a.m. Eastern., ahead of Thursday’s much-awaited speech from Fed Chair Jerome Powell.