You're going to tell me that I'm boring you with my Japanese titles. Believe me, I'd love to tell you about Swiss, European or even American titles. But frankly, no matter how hard I look, I can't find anything interesting. On the other hand, in the East, I keep coming across real gems at knock-down prices, and without having to look too hard. Toli Corp is one of them, and not just a little...
The company specializes in interior products, and has done so since... 1919 ! It supplies vinyl floor coverings, manufactures wall coverings, designs and sews curtains, and maintains interior materials. It has 1,800 employees.
The company is a real bargain, trading at 8.32 times recurring earnings, 0.75 times tangible book value, 0.28 times sales and 8.89 times free cash flow. The dividend yield is 2.48%, for a payout ratio of just 20.64%. So Toli still has plenty of room to either invest in the company's development or increase its dividend, something it has not shied away from doing in the past, at an annual rate of 14.87% over the past five years.
Not only are payouts increasing over the long term, but so are earnings, cash reserves and asset values. This proves that this fine company is able to create shareholder value over the long term. Toli's share price confirms this, having almost doubled in the last five years.
Liquidity reserves are good, with an improved current ratio of 1.6 and a reduced liquidity ratio of 1.3. This enables the company to meet its current financial obligations without difficulty. Gross margin was also up, at 28.9%, as was return on assets, at 4.02%, while gearing was down, at 7.03%. The number of shares outstanding has been stable for several years. All the lights are green for Toli.
With a history spanning almost a century, solid fundamentals and a business sector that may not be very defensive, but frankly isn't very glamorous, Toli has plenty to look forward to. Despite the rise in the share price since 2011, I can see the price doubling again over the next few years, and the dividend doing at least as well. To put things in perspective, Toli is currently trading at a quarter of its all-time highs... in 1990!
The Japanese stock market is an extreme mirror of our two main investment emotions: greed until the 1990s, then fear for almost 30 years. While all other markets have moved into the era of greed.
I've just bought Toli.
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I'd be curious to read one of your analyses of Bitcoin. Even if I have no intention of buying it (short or long term), I'd be really interested to know your point of view on this currency. Thank you very much!
Incomprehensible, worthless and dangerous. Here's what I think...
That's quite a lot of Japanese stocks! I'm curious: with all the positions you've initiated, what percentage of your portfolio is made up of Japanese stocks?
Despite all my recent purchases, I'm 'only' at 20%.
I'm thinking of moving up a bit more, as I'm still finding nice titles without too much trouble. I'll probably stop at around 25%.
What's most remarkable is that for the first time I have more Japanese titles than American ones (whereas this used to be my majority position).
Have you protected yourself against the JPY/CHF exchange rate risk, or are you ignoring the yen's evolution?
No. I stopped worrying about currencies a long time ago, and here's why:
non-exotic currencies fluctuate little, at least much less than share prices
- equities are usually inversely correlated with their underlying currency, which means that they cancel out or reduce the currency effect
- sometimes you win, sometimes you lose with the exchange rate effect, their effect diminishing according to the number of transactions carried out
- it is useless and very difficult to guess the meaning of currencies
- Hedging also costs money, and it's not certain that the operation will be more profitable than a solution without hedging.
In short, it's best to concentrate on what you can control best, and which offers the best earnings potential, and therefore the best hedge against a possible currency effect. I'm talking, of course, about equities...
OK, I see your point. Personally, I've had several bad experiences with foreign currency stocks and it's turned me off quite a bit. Dividends aren't any greener elsewhere...
And I always manage to find CH shares that interest me, despite the high market valuation. I have more ideas than money...
My bad experiences have shown me that there are 3 main problems with foreign equities:
1. currency risk
2. tax aspects (including dividend withholding)
3. I'm more familiar with Swiss companies and that gives me a slight advantage over foreign companies whose products I'm not familiar with and hear less about around me.
Yes, on the other hand, knowing too much about the companies you buy, typically the Swiss, also means developing a certain emotional bond with them, which can also be dangerous. I'm well placed to know this, since I'm madly in love with Emmi and Bell, for example 😉
It's true, and I know this phenomenon well too: I'm crazy about Burkhalter, IVF Hartmann, VAT and EMS Chemie!
Toli sale, stop loss procedure
https://www.dividendes.ch/2018/05/que-faire-quand-un-titre-devisse/