Views on Life & on Equity Investing

Wonder, Wealth & Abundance

No backflips for this undertaker

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Munger said the only person happily back-flipping (making money by definition) if there were to be a plague in the society, would be an undertaker, whilst everyone else bewails.

Back in 2013 I wrote about a funeral company in Australia, Invocare, which was/is a market leader in Australia and New Zealand with 35% market share of private cemeteries. After Peter Lynch’s book One Up On Wall St. the funeral stocks were re-rated after 1990s. Understandably, this business is more steady than FMCG or Utilities. These are extremely cash flow positive, depressing (no many like entering this business), and near monopolies like local quarry (heavy transport cost of rock, making the local one only commercially viable alternative). People from 10 sq. km, radius visit one closest to their home.

Back in 2013, it was trading at 26 times earnings, and has traded roughly around that.

I read another update from this company recently making me chuckle. It complains over the effective flu medication, reduced death rate in 2018 as a cause of one-off downtrend in revenues. No doubt, people will catch up with dying few months later. The company is now available at 13-14 times earnings.

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Written by amitdipsite

February 3, 2019 at 9:00 am

Posted in Uncategorized

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