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Widely Held Guru Stocks Near Historical Low P/B Ratios

Chris Mydlo

Chris Mydlo

41 followers

Buying stocks at historically low price-to-book (P/B) ratios has been an effective strategy. The model portfolio, “Top 25 Historical Low P/B Ratio Companies”, has outperformed the S&P 500 by 29.51 percent since its inception in 2010. The following stocks are widely held by the investing gurus we follow and are trading near their historical low P/B ratios:

Kellogg Company (K) is trading at a low P/B ratio of 6.10, near its 10-year low of 5.88. Its principle products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. The 5- and 10-year median P/B ratios are 8.4 and 8.5. At the 5-year median, the stock would be priced at $87.60. Book value per share has been growing at an annual rate of 11.90 percent over the past five years. The stock is held by 18 gurus we follow with Hotchkis & Wiley having the largest holding of 2.43 million shares, representing 0.68 percent of the shares outstanding.

Market Cap: 23.02 billion, P/E: 12.50

Business Predictability: 4/5, Financial Strength: 6/10, Profitability & Growth: 8/10

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Intercontinental Exchange Inc (ICE) is trading at a low P/B ratio of 1.70, near its 10-year low of 1.62. The company is a leading global network of exchanges and clearing houses. It acquired NYSE Euronext in November of 2013. The 5- and 10-year median P/B ratios are 2.9 and 5.2. At the 5-year median, the stock would be priced at $336.10. Book value per share has been growing at an annual rate of 31 percent over the past five years. The stock is held by 15 gurus we follow with Steve Mandel of Lone Pine Capital having the largest holding of 3.32 million shares, representing 2.88 percent of the shares outstanding.

Market Cap: 21.7 billion, P/E: 44.80

Business Predictability: 2/5, Financial Strength: 5/10, Profitability & Growth: 7/10

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SAP SE (SAP) is trading at a low P/B ratio of 4.21, near its 10-year low of 3.76. The company provides enterprise application software and software-related services worldwide offering solutions covering various lines of businesses. The 5 and 10-year median P/B ratios are 9 and 6.2. At the 10-year median, the stock would be priced at $113.10. Book value per share has been growing at an annual rate of 16.7 percent over the past five years. The stock is held by 14 gurus we follow with Ken Fisher of Fisher Asset Management having the largest holding of 6.01 million shares, representing 0.5 percent of the shares outstanding.

Market Cap: 92.84 billion, P/E: 21.60

Business Predictability: 5/5, Financial Strength: 9/10, Profitability & Growth: 9/10

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Bio-Rad Laboratories (BIO) is trading at a low P/B ratio of 1.50, near its 10-year low of 1.45. The company supplies the life science research, healthcare, analytical chemistry and other markets with a broad range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. The 5- and 10-year median P/B ratios are 1.8 and 2.1. At the 5-year median, the stock would be priced at $138.90. Book value per share has been increasing at an annual rate of 13.5 percent over the past 5 years. The stock is held by 11 gurus we follow with John Rogers of Ariel Investment having the largest holding of 1.02 million shares, representing 3.56 percent of the shares outstanding.

Market Cap: 3.47 billion, P/E: 57.00

Business Predictability: 3/5, Financial Strength: 6/10, Profitability & Growth: 6/10

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Owens & Minor Inc (OMI) is trading at a low P/B ratio of 2.00, near its 10-year low of 1.79. It is a leading healthcare logistics company that connects the world of medical products to the point of care. The 5- and 10-year median P/B ratios are 2.2 and 2.3. At the 5-year median, the stock would be priced at $35.70. The book value has been growing at an annual rate of 7.2 percent over the past 5 years. The stock is held by 11 gurus we follow with the Vanguard Healthcare Fund having the largest holding of 3 million shares, representing 4.76 percent of the shares outstanding.

Market Cap: 2.11 billion, P/E: 20.70

Business Predictability: 3/5, Financial Strength: 5/10, Profitability & Growth: 6/10

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Stericycle Inc (SRCL) is trading at a low P/B ratio of 5.50, near its 10-year low of 5.11. The company provides regulated and compliance solutions to healthcare and commercial businesses and collects and processes specialized waste for disposal services. The 5- and 10-year median P/B ratios are 5.8 and 7.2. At the 5-year median, the stock would be priced at $126.00. Book value per share has been growing at an annual rate of 19.8 percent over the past five years. The stock is held by 10 gurus we follow with David Rolfe of Wedgewood Partners having the largest holding of 2.22 million shares, representing 2.62 percent of the shares outstanding.

Market Cap: 10.03 billion, P/E: 32.20

Business Predictability: 5/5, Financial Strength: 8/10, Profitability & Growth: 9/10

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Imperial Oil Ltd (IMO) is trading at a low P/B ratio of 2.10, near its 10-year low of 1.93. The company is engaged in the exploration, production, and sale of crude oil and natural gas in Canada. The 5 and 10 year median P/B ratios are 2.8 and 5.9. At the 5-year median, the stock would be priced at $65.90. Book value per share has grown at an annual rate of 20.10 percent over the past five years. The stock is held by 10 gurus we follow with Sarah Ketterer of Causeway Capital Management having the largest holding of 282,224 shares, representing 0.03 percent of the shares outstanding.

Market Cap: 42.05 billion, P/E: 11.90

Business Predictability: 2.5/5, Financial Strength: 8/10, Profitability & Growth: 7/10

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For the complete list of stocks are traded at close to their historical low P/B ratios, go to: GuruFocus Value Strategies of Stocks That Are Traded at Historical Low P/B.

You can also follow the investing gurus at GuruFocus to see how they manage their holdings: Latest Guru Picks.


Rating: 3.3/5 (4 votes)

Voters:

Comments

salleeaz
Salleeaz - 4 months ago

Seems to me that 5 times book is not low P/B.

chris mydlo
Chris mydlo - 4 months ago

Its comparing historical lows for the companies. The Low P/B ratio portfolio is based on relative P/B rather than absolute P/B. Some industries tend to have higher P/B ratios. Possibly because the value of projected future cash flows compared to its book value is higher.

pravchaw
Pravchaw premium member - 4 months ago

The lower P/B ratio could be a result of over paying for an aquisition.

chris mydlo
Chris mydlo - 4 months ago

A little digging would have to be done to see if that is the case with ICE. Just like you alluded to, the P/B ratio makes a big drop after NYSE Euronext is acquired.

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