Is it too late to buy Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short, stock in March of 2024? Good question.
ASX shares and the S&P/ASX 200 Index (ASX: XJO) have been on a tear over the past few months. But over the last year, the gains have been more muted. Since the start of November, the ASX 200 has added a compelling 14.2% to its value. But over the past 12 months, the gain stands at 5.2% today.
In contrast, Soul Patts stock is up a whopping 23.13% since this time last year. Yep, one year ago, you could have bought this ASX 200 investing house for $28.68 a share. But today, those same shares are trading for $35.31 each at present.
As regular readers might know, Soul Patts is one of my favourite ASX investments. It's currently a major constituent of my portfolio, and I've been lucky to own these shares for many years now.
But thanks to this, the average price that I bought this company at is a lot lower than what it is today. That's great and all, but it does raise the question: Is it too late to buy or add Soul Patts shares now that they're 23% more expensive than a year ago?
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Is it too late to buy Soul Patts shares in 2024?
This is a difficult question to answer, thanks to the unique nature of how this company turns a profit. Soul Patts is not your regular ASX 200 stock. Rather than owning and running a single business, Soul Patts instead owns a vast portfolio of other shares and assets, which it manages on behalf of its shareholders.
Last month, we did a deep dive into this portfolio, so if you're curious about how it's made up, make sure to check that out.
But this fact makes it difficult to come up with a compelling valuation for the business ourselves, in turn meaning it is hard to determine whether the company is relatively cheap or expensive at any given share price.
I must admit, the recent run up in the Soul Patts stock price has made me more reluctant than usual to add to my existing position of late. After all, the company's portfolio has averaged a return of 12.5% per annum for the 20 years to 31 July 2023. So the past year's return is well above average.
However, if you don't already own a decent chunk of this quality company, I'll defer to the legendary Warren Buffett. Buffett once said, "It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price".
Soul Patts shares are certainly not at a wonderful price right now. At least in my view. But I think this wonderful company is still at a valuation that makes a long-term investment worthwhile.
