In the USA, there’s a peculiar fund called the Voya Corporate Leaders Trust that has never sold a single holding since its inception in 1935 unless a share “went bankrupt, merged, or [got] spun-off”. Back then, its founders had built a portfolio out of shares that had done well even during the Great Depression era of the late 1920s and early 1930s. Their reasoning was that “if companies could prosper even in those tough times, they could stay strong forever.” And boy was that a great strategy: Between 1970 and 2013, the trust had achieved compounded annualised…
In the USA, there’s a peculiar fund called the Voya Corporate Leaders Trust that has never sold a single holding since its inception in 1935 unless a share “went bankrupt, merged, or [got] spun-off”. Back then, its founders had built a portfolio out of shares that had done well even during the Great Depression era of the late 1920s and early 1930s.
Their reasoning was that “if companies could prosper even in those tough times, they could stay strong forever.” And boy was that a great strategy: Between 1970 and 2013, the trust had achieved compounded annualised returns of 11.6% as compared to the broader American share market’s returns of just 10.6%.
In light of that, here are 3 local shares – Dairy Farm Holdings (SGX: D01), Raffles Medical Group (SGX: R01), and Vicom (SGX: V01) – that have managed to “prosper” considerably and consistently over the past decade between 2003 and 2013. More importantly, these 3 shares also weathered the last big crisis remarkably well.
Singapore’s last big crisis – the Great Financial Crisis of 2007-09 – was a painful episode which saw the Straits Times Index (SGX: ^STI) fall by close to two-thirds from an October 2007 peak of 3,876 points.
Many companies were affected as they saw their businesses decline; some of them have yet to see their businesses recover after more than five years since the Straits Times Index bottomed out on March 2009. Former blue chip Neptune Orient Lines (SGX: N03) is one such example; the shipping firm’s bottom-line has plummeted from a profit of US$523 million in 2007 to a loss of US$250 million in the last 12 months.
But, as mentioned earlier, Dairy Farm Holdings, Raffles Medical Group, and Vicom certainly do not belong to the same category as Neptune Orient Lines. The table below showcases the earnings history of the trio.
|Year||Dairy Farm*||Raffles Medical**||Vicom**|
|2007 (crisis year)||19.2||7.36||15.9|
|2008 (crisis year)||24.7||6.10||18.6|
|2009 (crisis year)||27.0||7.30||23.4|
|Last 12 months||37.1||15.6||32.8|
*Earnings per share figures in US cents; **Earnings per share figures in Singapore cents
Source: S&P Capital IQ
With such steady earnings growth, the companies’ shares have also turned in a solid market-beating performance: Between the start of 2003 and today, Dairy Farm’s shares have returned 1,021% without even accounting for any gains from dividends; likewise, shares of Raffles Medical Group and Vicom have grown by 1,467% and 913% respectively. By way of comparison, the Straits Times Index has increased by merely 143% to its current level of 3,257 points.
Dairy Farm Holdings is a pan-Asian retailer with over 5,800 outlets consisting of supermarkets, hypermarkets, convenience stores, and health & beauty stores amongst others. Meanwhile, Raffles Medical Group is a healthcare service provider that runs more than 80 medical centres and clinics in Singapore, Hong Kong, and China in addition to operating its flagship tertiary Raffles Hospital in Singapore. Lastly, Vicom provides vehicle testing and inspection services in Singapore (it has the largest market share here) and also provides commercial and industrial testing and inspection services for a wide array of industries that include Oil & Gas, Aerospace, Marine, Food, Electronics, and Construction.
Foolish Bottom Line
Those of you with sharp eyes might notice that the trio, despite having displayed an unmistakable upward trend in their earnings, have not managed to grow their profits in each consecutive year between 2003 and 2013.
But, that does not take anything away from their historical achievements; after all, it’s commonplace for even the greatest of businesses to suffer from occasional hiccups along the way. What’s more important here is whether the trio of companies can earn substantially higher profits 5, 10, 20, or even 30 years from now.
So here comes the million dollar question: Can they do so? Unfortunately, there are no hard and fast answers for such a question and it would be up to each investor to decide for him or herself.
Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool's free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.
The Motley Fool's purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Raffles Medical Group.