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5 Profitable Companies With a Margin of Safety

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·5 min read
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Companies that have positive and steady net margins and operating margins are often good investments because they can return a solid profit to investors.

According to the GuruFocus discounted cash flow calculator as of July 13, the following undervalued companies have a high margin of safety and have grown their margins over a 10-year period.

Kansas City Southern


Kansas City Southern's (KSU) net margin and operating margin have grown 19.15% and 33.26% per annum, respectively, over the past 10 years.

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According to the DCF calculator, the stock is undervalued with a 15.43% margin of safety at $143.74 per share. The price-earnings ratio is 24.08. The share price has been as high as $178.59 and as low as $92.86 in the last 52 weeks; it is currently 19.51% below its 52-week high and 54.79% above its 52-week low.

The railroad operator has a market cap of $13.66 billion and an enterprise value of $17.19 billion.

The company's largest guru shareholder is Pioneer Investments (Trades, Portfolio) with 0.69% of outstanding shares, followed by Ken Fisher (Trades, Portfolio) with 0.56% and Joel Greenblatt (Trades, Portfolio)'s Gotham Asset Management with 0.09%.

Comcast

The net margin of Comcast Corp. (CMCSA) has grown 10.86% per annum over the past decade. The operating margin has grown 20.92% per annum over the past decade.

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According to the DCF calculator, the stock is undervalued with a 42.02% margin of safety at $40.51 per share. The price-earnings ratio is 16.08. The share price has been as high as $47.74 and as low as $31.71 in the last 52 weeks; it is currently 15.14% below its 52-week high and 27.75% above its 52-week low.

The owner of cable networks and provider of television and internet services has a market cap of $184 billion and an enterprise value of $281 billion.

The company's largest guru shareholder is Dodge & Cox with 1.81% of outstanding shares, followed by First Eagle Investment (Trades, Portfolio) with 0.71% and Andreas Halvorsen (Trades, Portfolio) with 0.39%.

Essex Property

Essex Property Trust Inc. (ESS) has grown its net margin and operating margin by 24.51% and 31.71% per year, respectively, over the past 10 years.

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88567a2b7acd9c2e6082f42ce8d98662.png

According to the DCF calculator, the stock is undervalued with a 9.74% margin of safety at $225.33 per share. The price-earnings ratio is 23.42. The share price has been as high as $334.17 and as low as $175.81 in the last 52 weeks; it is currently 32.57% below its 52-week high and 28.17% above its 52-week low.

The owner of apartment communities has a market cap of $14.74 billion and an enterprise value of $21.23 billion.

The company's largest guru shareholder is Pioneer Investments (Trades, Portfolio) with 0.88% of outstanding shares, followed by Jim Simons (Trades, Portfolio)' Renaissance Technologies with 0.86% and Third Avenue Management (Trades, Portfolio) with 0.15%.

China Biologic Products

The net margin of China Biologic Products Holdings Inc. (CBPO) has grown 27.14% per annum over the past decade. The operating margin has grown 41.25% annually over a 10-year period.

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942d4bb962183e2f3ab651098df48b97.png

According to the DCF calculator, the stock is undervalued with an 5.16% margin of safety at $106.65 per share. The price-earnings ratio is 27. The share price has been as high as $119.44 and as low as $88 in the last 52 weeks; it is currently 10.71% below its 52-week high and 21.19% above its 52-week low.

The biopharmaceutical company has a market cap of $4.1 billion and an enterprise value of $3.19 billion.

The company's largest guru shareholder is Renaissance Technologies with 0.65% of outstanding shares, followed by Caxton Associates (Trades, Portfolio) with 0.02%.

Chase

Chase Corp.'s (CCF) net margin and operating margin have grown 11.35% and 16.51% per year, respectively, over the past 10 years.

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According to the DCF calculator, the stock is undervalued with a 7.36% margin of safety at $97.85 per share. The price-earnings ratio is 26.37. The share price has been as high as $127.50 and as low as $52 in the last 52 weeks; it is currently 23.25% below its 52-week high and 88.17% above its 52-week low.

The provider of industrial products has a market cap of $923 million and an enterprise value of $846 million.

With 4.29% of outstanding shares, Simons' firm is the company's largest guru shareholder, followed by Chuck Royce (Trades, Portfolio) with 1.84%.

Disclosure: I do not own any stocks mentioned.

Read more here:

  • 6 Banks Trading With Low Price-Sales Ratios

  • 5 Utilities Outperforming the Market

  • Insiders Roundup: Mastercard, Eli Lilly



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This article first appeared on GuruFocus.