In search of bargains, investors may want to consider the following three companies, as their stocks have a low price-to-median-price-sales-value when compared to the average of the S&P 500 (which stands around 1.6 as of the writing of this article).
This approach is based on the idea that the stock valuation will revert to its historical (10-year) average in terms of the price-sales ratio. It requires investors to divide the current share price by the trailing twelve-month revenue per share times the 10-year median price-sales ratio.
Sell-side analysts one Wall Street are positive about these securities as they have issued optimistic recommendation ratings for each of them.
Enterprise Products Partners
The first stock to consider is Enterprise Products Partners LP (EPD, Financial), a Houston-based oil and gas midstream operator.
Enterprise Products Partners' median price-sales ratio is 1.28 as of March 19, which ranks higher than 30% of 493 companies that operate in the oil and gas industry.
The company's revenue per share for the trailing 12 months ended in December was $12.351. Enterprise Products Partners has a 10-Year Median price-sales ratio of 1.4217. Thus, the median price-sales value is $17.56 as of March 19.
The stock closed at $22.49 per share on Friday for a market capitalization of $49.06 billion and a 52-week range of $12.53 to $23.71.
Currently, Enterprise Products Partners pays a quarterly dividend of 45 cents per common share with the last payment issued on Feb. 11, which was a 1.12% hike from the previous distribuiton. The stock offers a trailing 12-month dividend yield of 7.94% as of March 19.
GuruFocus assigned a score of 4 out of 10 to the company's financial strength and 7 out of 10 to its profitability.
Wall Street recommends a median rating of buy with an average target price of $27.38 per share for the stock.
America Movil
The second stock to consider is America Movil SAB de CV (AMX, Financial), a Mexican provider of telecommunication services in the Americas and Europe.
America Movil's median price-sales ratio is 0.80 as of March 19, which ranks higher than 72% of 196 companies that operate in the telecommunication services industry.
The revenue per share for the trailing 12 months ended in September was $14.619. America Movil has a 10-year median price-sales ratio of 1.1909. Thus, its median price-sales value is $17.41 as of March 19.
The stock was trading at $13.87 per share at close on Friday for a market capitalization of $46.22 billion and a 52-week range of $10.12 to $15.24.
Currently, America Movil pays semiannual dividends to its shareholders. In 2020, the company distributed 16.8 cents per common share on July 27 and 18.7 cents per common share on Nov. 17. The stock offers a trailing 12-month dividend yield of 2.56% as of March 19.
GuruFocus assigned a score of 4 out of 10 to the company's financial strength and 7 out of 10 to its profitability.
Wall Street recommends a median rating of buy for the stock with an average target price of 360.36 Mexican pesos ($17.53) per share.
Telefonaktiebolaget L M Ericsson
The third stock to consider is Telefonaktiebolaget L M Ericsson (ERIC, Financial), a Stockholm, Sweden-based information and communications technology solutions provider in North America and internationally.
Ericsson's median price-sales ratio is 1.44 as of March 19, which ranks it higher than 46% of 1,361 companies that operate in the hardware industry.
The revenue per share for the trailing 12 months ended in December was $7.76. Ericsson has a 10-year median price-sales ratio of about 1.1946. Therefore, the median price-sales value is $9.27 as of March 19.
The stock price was trading at $13.33 per share on Friday for a market capitalization of $44.36 billion and a 52-week range of $6.75 to $15.32.
Currently, Ericsson pays a semiannual dividend to its shareholders. In 2020, the company paid 7.5 cents per common share on April 22 and 8.4 cents per common share on Oct. 15. The next distribution of 12.1 cents per common share (up 44% from the previous payment), is scheduled sometime in April. The stock offers a trailing 12-month dividend yield of 1.19% and a forward dividend yield of 1.54% as of March 19.
GuruFocus assigned a score of 6 out of 10 to both the company's financial strength and profitability.
Wall Street recommends a median rating of overweight with an average target price of $15.03 per share for the stock.
Disclosure: I have no position in any securities mentioned.
Read more here:
- 3 Stocks Trading Near the GF Value Line
- 3 Magic Formula Stocks for the Value Investor
- A Trio of Stock Picks for the 'Buy and Hold' Approach
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