Portfolio manager David Fried puts his focus on those companies that have bought back some of their own shares, reducing some of the dilution of the market. In addition to buy backs, Diversified Buybacks pays close attention to the financial health and stability of the companies he buys and analyzes their earnings, cash flow, management, favorable competitive circumstances and debt ratings.
The DirecTV Group Inc (NYSE: DTV) With a subscriber count that has steadily risen over the past several years, an increased workforce in 2009, a new CEO and steadily increasing revenues, DirecTV seems like a company with some promise. At one time, DirecTV’s many different tiered plans and increased channel offerings gave it a distinct edge over the more restrictive plans offered by cable competitors. But a high price to book ratio and the recent loss of 800,000 cable subscribers indicates that there may be some rough times in DirecTV’s future as consumers search for cheap or free ways to view the television shows once available only via cable and satellite. While the variety of free television shows available on the Internet will probably never match those you can get via satellite, the combination of a slowed economy, increased unemployment and little disposable income certainly make free a much more appealing option.
AutoZone, Inc. (NYSE: AZO) Boasting a lower price to earnings ratio than its competitors and high earnings per share, AutoZone is a conservative bet for a buy and hold strategy. Most importantly, perhaps, is the future potential of the company. While car sales (though slightly increasing) are still trailing behind 2008 numbers and American consumers hold on to their older model vehicles longer, AutoZone benefits from this thriftiness and is delivered a cadre of price-conscious consumers who need perform preventative maintenance on their cars. And with a lower price to earnings ratio than some competitors, it certainly seems as though the AZO price is right.
