Great investors buy exceptional companies when they trade below their true value and often hold them for years, confident that rising earnings growth will drive share-price gains.
That sounds good in theory, but it is hard in practice. The market spots exceptional companies and they rarely trade below intrinsic value for long. When they do, investors must pounce.
Ramsay Health Care fits the bill. The private hospital operator has traits of exceptional companies. The best is a high, rising Return on Equity (ROE) over many years. Ramsay’s average ROE over the past four years is at 20%, or almost double that of a decade ago.