12,638 Companies You Need to Know About

Berkshire Hathaway's (NYSE: BRK-A  ) Warren Buffett wasn't always the chairman of one of the largest public companies. In the mid '50s to late '60s, he ran his own partnership and produced some pretty remarkable returns.

How'd he do it? He credits at least part of his success to having studied every publicly traded company out there.

Sure it sounds crazy, but it might just be crazy enough to work. That's why last week I started the process of researching all of the 12,638 U.S.-listed public companies with market caps of $1 million or more.

Continuing that herculean effort, here are the next four stocks on the list.

Company

Aaron's

Industry

Consumer finance

Comparable Companies

Rent-A-Center, Bestway

Market Cap

$1.7 billion

Price-to-Earnings Ratio

15.1

CAPS Rating (out of 5)

****

Source: CAPS, Yahoo! Finance, and Capital IQ, a Standard & Poor's company.

Does credit by any other name smell as sweet? It certainly seems that way for Aaron's. The company focuses on the lease and lease-to-own market, allowing customers to take home a TV or couch and pay it off (with plenty of interest) over a period of time.

The model is a pretty sweet one. The customers that do end up paying off their lease end up paying much more for the item than they otherwise would have. And when a customer doesn't pay? It's quite simple -- Aaron's takes back the goods.

The proof has been in the results. Though it's had its ups and downs, the company has stayed consistently profitable and delivered some pretty steady growth. The stock has followed suit, producing average annual returns of 18% since 1992.

I think Aaron's is a stock worth keeping an eye on.

Company

PrimeEnergy

Industry

Independent Oil & Gas

Comparable Companies

Anadarko Petroleum (NYSE: APC  ) , Brigham Exploration

Market Cap

$77 million

Price-to-Earnings Ratio

NA

CAPS rating (out of 5)

**

Source: CAPS, Yahoo! Finance, and Capital IQ, a Standard & Poor's company.

It's unclear to me that PrimeEnergy is doing anything particularly interesting that would set the company apart from the rest of the oil and gas players.

That said, the loss that the company posted for the 12 months ending in September is neither surprising nor concerning, considering the dip that oil and gas prices took at the beginning of 2009. What is concerning though, is the company's balance sheet, which appears to be loaded down with debt. As of last September, the company's debt-to-equity ratio was more than 300%.

I don't think we need to get too into the weeds on this one to label it a "pass."

Company

Micron Enviro Systems

Industry

Oil and Gas Exploration and Production

Comparable Companies

Devon Energy (NYSE: DVN  ) , EnCana (NYSE: ECA  )

Market Cap:

$1.3 million

Price-to-Earnings Ratio

NM

CAPS Rating (out of 5)

NA

Source: CAPS, Yahoo! Finance, and Capital IQ, a Standard & Poor's company. NM = not meaningful.

If there's something to like about Micron Enviro Systems, then I've totally missed it. Though the company is classified under "oil and gas exploration and production," the label is a little misleading as the company doesn't actually produce anything. Over the past two years, the company hasn't produced any revenue to speak of and has primarily succeeded at racking up losses.

This is a definite pass.

Company

Metro Bancorp

Industry

Regional Bank

Comparable Companies

Fifth Third Bancorp (Nasdaq: FITB  ) , BB&T

Market Cap

$168 million

Price-to-Earnings Ratio

NM

CAPS Rating (out of 5)

*****

Source: CAPS, Yahoo! Finance, and Capital IQ, a Standard & Poor's company. NM = not meaningful.

A company presentation from last year boldly states that Metro Bank is "America's Next Great Bank." If that's the case, then we investors certainly don't want to miss out.

While I appreciate management's enthusiasm, I'm a bit less optimistic after doing some digging on Metro Bank. The bank's recent rebranding efforts, acquisition of Republic First Bancorp, and its yen for more stores make this a small bank to watch on the growth front.

A few items make me a bit queasy, though. For one, more than 10% of the company's assets are in nonagency mortgage-backed securities. In addition, a good chunk of the company's loans are commercial and commercial real estate -- the latter of which is seen by many as a continued banking pain point. This portion is set to expand once the Republic First acquisition closes.

Finally, the company's provision for loan losses covers only 38% of nonperforming loans. To put that in perspective, Wells Fargo (NYSE: WFC  ) and US Bancorp (NYSE: USB  ) have nonperforming loan coverage of 100% and 93%, respectively.

In the end, Metro Bancorp is a pass.

We've now knocked another four off the list, but still have 12,631 companies left to go. Be sure to stay tuned for the next installment!

Think this process is too long and tedious? Fool Jordan DiPietro thinks he has the one value stock to buy right now.

Berkshire Hathaway is a Motley Fool Inside Value and Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...


Read/Post Comments (2) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 08, 2010, at 9:27 PM, Carioca58 wrote:

    I commend your ambition, but shouldn't you add some method? I mean, if you want to comment on 12,000+ stock, at the rate of 4 per letter, it will take you 3,000 letters like these. Even if you issue one per day, it will take more than 10 years (with a few breaks for weekends and holidays).

    Focus on some characteristic, such as international only, small cap only, dividends only... Wait, I think I've heard an idea like this before.

    Fool on!

  • Report this Comment On March 08, 2010, at 9:36 PM, TMFKopp wrote:

    @StockClueless

    I 100% agree that the approach seems crazy and haphazard. However, that's exactly the point. When you start sorting stocks into boxes then you begin to overlook stuff -- and sometimes for very arbitrary reasons. For instance, is a small cap a stock with a market cap of under $2 billion? What of the stocks that have a market cap of $2.001 billion? You can say something similar for sorting methods like P/E, price-to-book, industry, etc.

    Maybe more importantly, I think Buffett saw this as an opportunity to learn about a broad array of companies/stocks. If nothing else, once you've looked at enough lumps of coal, you get a better appreciation for just how beautiful a diamond is.

    Matt

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