Covestor model manager Ryan Lee’s Long-Term Conservative model has a five year time horizon and takes a conservative approach to investing. When reviewing potential companies to add to the model, Lee looks for returns on invested capital, cash flow, debt and company growth. His goal is to buy at a 30% discount to the stock’s intrinsic value.
The top position in this model is Apollo Group Inc (NASDAQ: APOL), a company that provides programs for adults who want to further their education in online school programs. The company’s total liabilities have increased quite a bit recently, going from $924.7 million in 2008 to $2 billion in 2010, although in quarter two of 2010 they were reduced to $1.7 billion. The company’s investment cash flow had been deteriorating steadily since 2006, but it did improve in the second quarter of 2010. Net income reported in 2009 incased more than $120 million from 2008.
Another top holding in the model is Becton Dickinson & Co (NYSE: BDX). BDX is a medical technology company that manufactures and sells medical supplies, equipment and devices that are used by researchers, laboratories and healthcare providers. The company’s total liabilities jumped from $2.9 billion in 2008 to $4 billion in 2009, but reduced slightly to $3.9 billion in the second quarter of 2010. Their investing cash flow fell in 2009 but their net income increased.
Finally, Lee has Republic Services Inc (NYSE: RSG) as the third top holding in his model. RSG is a waste collection, disposal and recycling company. Their total liabilities fell from $12.6 billion in 2008 to $12 billion in 2009. In the second quarter of 2010 they fell even further to $11.9 billion. In 2009 their net income reached its highest point in four years while their net cash flow from investing improved.
