In order to increase the likelihood of discovering value stocks, investors select those companies with a market capitalization exceeding $2 billion but whose price-book ratio is less than 1.5.
Thus, value investors should take a look at the following stocks as they have the above-mentioned criteria.
Fidelity National Information Services
The first company that has the above-listed criteria is Fidelity National Information Services Inc. (FIS, Financial). Shares of the Jacksonville, Florida-based financial services technology company closed around $102.82 on March 20 for a market capitalization of around $63.4 billion.
The price-book ratio of 1.28 is below the industry median of 2.25, outperforming 1,231 out of a total of 2,010 companies operating in the software industry.
The stock has fallen 26% so far this year to below the 50-day simple moving average line. It also stands significantly below the midpoint of the 52-week range of $91.68 to $158.21.
GuruFocus assigned a moderate rating of 4 out of 10 for the company’s financial strength and a very good rating of 7 out of 10 for its profitability.
Wall Street suggests an overweight recommendation rating for shares of Fidelity National Information Services with an average target price of $170.32 per share. The overweight recommendation rating means the stock is projected to outperform either the industry or the entire market.
Aramark
The second company that meets the criteria is Aramark (ARMK, Financial). Shares of the Philadelphia-based provider of food, facilities and uniform services to several businesses in North America and internationally closed at $19.43 on March 20 for a market capitalization of around $4.9 billion.
The price-book ratio of 1.41 is below the industry median of 1.76, outperforming half of the companies that operate in the restaurants industry.
The share price has fallen 55% so far this year to below the 50-day simple moving average line. Further, the stock is significantly below the midpoint of the 52-week range of $9.65 to $47.22.
GuruFocus assigned a moderate rating of 4 out of 10 for the company’s financial strength and a positive rating of 6 out of 10 for its profitability.
As of March, Wall Street sell-side analysts recommend an overweight rating for this stock with an average target price of $35.14 per share.
ALLETE
The third company that meets the criteria is ALLETE Inc. (ALE, Financial). Shares of the Duluth, Minnesota-based regulated utility electric and natural gas distributor were trading around $54.71 at market close on March 20 for a market capitalization of around $2.8 billion.
The price-book ratio of 1.27 is below the industry median of 1.36 and tops 287 competitors out of a total of 510 companies that operate in the utilities – diversified industry.
Year to date, the stock has tumbled 33% to below the 50-day simple moving average line. The share price is currently only slightly above the lower limit of the 52-week range of $53.17 to $88.60.
GuruFocus assigned a moderate rating of 4 out of 10 for the company’s financial strength, but a very good rating of 7 out of 10 for its profitability.
Wall Street recommends a hold rating for shares of ALLETE and has established an average price target of $81.40 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
