Buying a company at 43,9x PE as a value investor?

Besides the homebuilders, there is another contrarian investment in my portfolio. As a value investor, you often encounter cyclical companies. It’s easy to get burnt on them as cyclical companies tend to appear cheap when they are not, and expensive when they are cheap.

What would you think if I told you there's a company in my selection trading at a price-to-earnings ratio of 43.9x? That would seem strange for a value investor, wouldn't it? But when you realize it's also trading at less than 0.5x tangible book value and has an EV/EBIT of 8.5, the picture immediately changes. Does that mean we're already at a trough in the cycle? Probably not.

With this company, I want to capitalize on the possibility that the world economy is stronger than current market expectations. If I can make a quick profit, I will, even if fair value hasn't been reached yet.

In the initial presentation (September 2023), I wrote this: "However, sentiment could also quickly drive the price down by 25%, but then I know I own a solid company that is worth more, and I will patiently wait." For now, it seems like this latter scenario is coming true, time to buy some more.

I introduce you to: