Kansas City and San Francisco may not have much in common, but at the moment they are in each other's faces as their baseball teams battle in the World Series.
San Francisco, known around the world for its Silicon Valley and tech industry, would seem to have the upper hand: The Giants have won two of the past four World Series. Kansas City, for its part, is a Middle West stalwart that is home to such well-known companies as Hallmark Cards and car-rental outfit Enterprise, both privately owned, and Sprint (S), which was recently acquired by Japan's SoftBank. As for the Kansas City Royals, they have not been near the World Series in 29 years.
But today, one has to say, neither Kansas City nor San Francisco are slouches, whether on or off the field. In fact, as I write this, the Series is tied at one win apiece.
On the Royals side, I want to pitch fans on Waddell & Reed Financial (WDR), headquartered in the Kansas City suburb of Overland Park, Kan. Waddell is a mutual-fund manager -- of Ivy Funds -- as well as a provider of financial-planning services. In its 2013 annual report, the company noted that it had $126 billion of assets under management. Waddell's price-to-earnings ratio is a relatively modest 12.98x, and it is generating a 21.53% earnings-per-share growth rate, based on the average of the three-, four- and five-year average historical rates.
Taken together, this produces a P/E relative to growth (P/E/G) ratio of 0.61. That is a very favorable level: One of my guru trading strategies is based on Peter Lynch's writings, and that strategy allows the P/E/G to be as high as 1.0. What this P/E/G is saying is that any investor in this stock would be buying growth at a good value, given the share price.
Giants fans might hit it big with Oracle (ORCL). Led by the always colorful Larry Ellison, Oracle is a major provider of enterprise software. Like Waddell, Oracle is a favorite of the automated strategy I based on Peter Lynch's writings. This software giant's yield-adjusted P/E/G is a perfectly acceptable 0.92.
Both of these companies, then, are winners -- long-term leaders in their industries that have solid track records. As for the World Series, well, I do not have any skin in the game this year, so all I can say is: Let the best team win.
