Look back though to my previous article — the Aminex commentary highlights
the same valuation approach:
Not surprisingly, I've used
the same valuation approach as with CPL (CPL: ID) and CRH (CRH: ID), but with one interesting twist: Operating Free Cash Flow (FCF) leads and lags operating profitability in a bust and boom, respectively.
Not exact matches
Equally worthy of note, the very
same valuation measures during the bullish peaks in the 20 - year period never
approached the mindless extremes that exist at present.
Thanks — put another way though — if you just buy a portfolio of say low EV / EBITDA (just as an example), and you basically run 100 % exposure on that
approach — does history say in expensive markets you plod on with the
same or is there a demonstrable benefit in changing exposure based on overall market
valuation?
Sure, there's lots of companies & sectors which clearly deserve a variety of different
valuation approaches, ratios & metrics — but on the other hand, the
same operating margin and / or earnings growth rate (for example) surely doesn't deserve a ridiculously higher multiple in one sector vs. another.
And that kind of diversification's dependent upon & unique to your current portfolio, so one can obviously expect two investors looking at the
same stocks (& with a similar
approach to stock
valuation) will probably arrive at a very different end - result in their stock selection.