Major Resource Companies Still Look Expensive
At Montgomery we seek to own high quality businesses with bright prospects. A key feature of a quality business is an ability to control the product(s) they sell and also the prices they charge to their clients. In our experience, resource-like companies are almost the polar opposite of this; their prospects are often hard to lock down with any certainty given they are highly cyclical businesses and they cannot control the prices for their production. At a minimum, until we begin to witness an expectation that earnings for the sector are looking like they will recover and again grow, with the top 10 resource companies at 18.41 times expected earnings, the risk to our clients capital of further losses is just too high in the face of persistent negative earnings revisions. There are simply better opportunities elsewhere. READ THE FULL ARTICLE HERE: (VIEW LINK)
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