QVI Portfolios Review | Fall 2023 | #7
Part Seven of a Series | Industrials Sector Holdings: Group 2
Summary
This review of Quality Value Investing’s portfolios covers 5 of 11 industrial sector holdings (Group 2): Cummins, MSC Industrial Direct, Hub Group, Caterpillar, and Ferguson.
The post includes updates to QVI’s checklist research and analysis of each company’s current wealth and the stock price’s present value.
Any changes in my view (buy, hold, sell) are reflected in the QVI Concentrated and Expanded Real-Time Portfolios.
This post, in its entirety, is exclusive to premium (paying) subscribers.
When referencing this report, premium (paying) subscribers can access their Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on October 12, 2023, and intended for illustration only.
In this series, Quality Value Investing (QVI) reviews the holdings in the QVI Real-Time Portfolios by sector to update each stock pick’s performance, current wealth, and present value.
Today’s post analyzes 5 of QVI’s 11 industrial sector holdings (Group 2): Cummins (CMI), MSC Industrial Direct (MSM) Hub Group (HUBG), Caterpillar (CAT), and Ferguson (FERG).
Company Current Wealth
To uncover the current wealth of the company, QVI defines the value proposition, measures select returns on management, and assesses enterprise downside risks.
Value Proposition
QVI’s value proposition section defines the competitive advantages of a company’s products or services to its customers compared to the industry, including the stock’s historical performance vs. the sector and market.
Value Proposition Elevator Pitches
Cummins is a trusted truck diesel engine manufacturer that leverages their reputation for customer-driven responsibility and leads the industry transition to low, if not emissions-free, transport.
MSC Industrial Direct is an underfollowed small-cap that has been outperforming the broader market, distributing metalworking, repair, and operations products and services with growth and profitability.
Hub Group is the #2 intermodal marketing company in the freight transportation and logistics services space. It has plenty of opportunity for growth over the longer term despite near-term recessionary fears and the potential effects on the trucking industry.
Caterpillar is a construction equipment manufacturer and one of the world's most valuable and recognizable brands that provides customers with reliable, high-quality products while offering the lowest total cost of ownership.
Ferguson is the largest distributor of heating, ventilation, and air conditioning products to North America's industrial and construction markets, and its stock price has a long history of outperforming the sector and the broader market.
Performance vs. Sector and Market
The chart below illustrates each Group 2 holding’s performance against the Industrial Select Sector SPDR® Fund ETF (XLI) and the SPDR® S&P 500 ETF Trust (SPY) since May 24, 2022, when QVI’s first sector holding, CMI, was added to the Expanded Portfolio.
FERG, CAT, MSM, and CMI outperformed the sector and market in total return during the coverage timeframe. HUBG underperformed against the sector and market during the coverage window.
Next, we’ll look at each stock’s performance since being added to the QVI Real-Time Portfolios.
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