When investors pick stocks with a market capitalization of more than $5 billion but less than 1.5 times the book value, they have more likely to unearth high-quality companies.
Thus, value investors may be interested in the following securities, which have also received positive recommendation ratings from sell-side analysts on Wall Street.
Zions Bancorporation, National Association
The first company that meets the above criteria is Zions Bancorporation, National Association (ZION, Financial). Shares of the Salt Lake City, Utah-based regional bank closed at $51.63 on Dec. 20 for a market capitalization of $8.80 billion.
The price-book ratio of 1.27 is higher than the industry median of 1.05 but still outperforms 932 out of 1,429 companies that operate in the banks industry.
The share price has grown 81% in the past 5 years through Dec. 20, but it is still trading below the earnings line, as indicated by the Peter Lynch chart. This suggests that the stock may be undervalued.
GuruFocus assigned a rating of 3 out of 10 for the company’s financial strength and 4 out of 10 for its profitability.
On Nov. 21 this year, Zions Bancorporation paid a quarterly cash dividend of 34 cents per common share, producing a 2.63% forward dividend yield as of Dec. 20. The company has been paying quarterly dividends for over 35 years.
Wall Street suggests to hold shares of Zions Bancorporation, National Association with a price target of $48 per share.
Woori Financial Group Inc.
The second company with the above criteria to consider is Woori Financial Group Inc (WF, Financial). Shares of the South Korean regional bank closed at $30.89 on Friday for a market capitalization of $6.93 billion.
The price-book ratio of 0.39 is better than the industry median of 1.08 and beats 1,267 out of 1,429 regional bank competitors.
The share price has risen 6.3% in the past 5 years through Dec. 20, but it is still cheap according to the Peter Lynch chart.
The stock has a forward price-earnings ratio of 4.83 versus the industry median of 11.22 and a price-sales ratio of 1.13 versus the industry median of 2.97.
Wall Street suggests an overweight rating for shares of Woori Financial Group Inc., indicating that analysts predict the stock to outperform either its industry or the entire market in the next 12 months. The average target price is $39.23 per share.
The third company with the above criteria is OneMain Holdings, Inc. (OMF, Financial). Shares of the Evansville, Indiana-based provider of consumer finance and insurance products and services closed at $44.09 on Friday for a market capitalization of $6 billion.
The price-book ratio of 1.47 is higher than the industry median of 0.94, but the company is still outperforming 307 out of 439 companies operating in the credit services industry.
The stock has grown 20% over the past 5 years through Dec. 20. Regardless of the significant increase, the share price is still trading cheaply as it is well below the Peter Lynch earnings line.
The stock has a GuruFocus financial strength rating of 2 out of 10 and a profitability rating of 4 out of 10.
On Dec. 13 this year, OneMain Holdings paid a quarterly cash dividend of 25 cents per common share, generating a 2.27% forward and trailing 12-month dividend yield as of Dec. 20. The company started paying dividends on March 15, 2019.
Wall Street recommends a buy rating for this stock and has set an average target price of $50.24.
Disclosure: I have no positions in any securities mentioned.
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- A Trio of High Yield Stocks for the Dividend Investor
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