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Alberto Abaterusso
Alberto Abaterusso
Articles (2265) 

These 3 Stocks Are Trading at Enticing Valuations

These strong businesses could have high potential

June 15, 2020 | About:

One way to increase the likelihood to uncover high-quality investments is to search for the reasonably-priced stocks of companies that have good financial conditions and are predicted to increase their earnings per share (EPS).

Thus, investors may want to consider the following stocks, as they trade near the Peter Lynch earnings line and have a return on invested capital (aka ROIC) that surpasses the weighted average cost of capital (aka WACC). Wall Street sell-side analysts predict that the they will perform better than S&P 500 in terms of higher EPS.

PT Telekomunikasi Indonesia (Persero) Tbk

The first company that meets the above-listed criteria is PT Telekomunikasi Indonesia (Persero) Tbk (NYSE:TLK), an Indonesian provider of telecommunication services.

The share price ($21.35 as of June 12) trades above the Peter Lynch earnings line but still below the median historical valuation line.

The stock has a market capitalization of $21.15 billion and a 52-week price range of $16.06 to $31.48.

PT Telekomunikasi Indonesia has a ROIC of 17.2%, which is three times the WACC of 4.94%.

Wall Street sell-side analysts predict that the EPS of PT Telekomunikasi Indonesia will grow by 8.7% per annum over the next five years compared to the S&P 500's 4%. Analysts recommend buying shares of PT Telekomunikasi Indonesia and have established an average target price of $27.91 each.

Las Vegas Sands Corp

The second company that has the above listed criteria Las Vegas Sands Corp (NYSE:LVS), a Las Vegas-based operator of resorts and casinos in the U.S. and Asia.

The share price ($49.87 as of June 12) trades slightly above the Peter Lynch earnings line but below the median historical valuation line.

The stock has a market capitalization of $38.09 billion and a 52-week price range of $33.3 to $74.29.

Las Vegas Sands Corp has a ROIC of 13.85%, which is higher than the WACC of 8.14%.

Wall Street sell-side analysts predict that Las Vegas Sands Corp will grow its annual EPS to $2.5 in full fiscal 2021 from an expected loss of 4 cents in full fiscal 2020. The S&P 500 is forecasted to increase its EPS by 30% during the same period. Analysts recommend a buy rating for this stock and have produced an average price target of $59.17 per share.

Snap-on Inc

The third company that has the above listed criteria is Snap-on Inc (NYSE:SNA), a Kenosha, Wisconsin-based manufacturer and marketer of tools and accessories for professionals worldwide.

The share price ($135.01 as of June 12) is currently trading substantially below the Peter Lynch earnings line and the median historical valuation line.

The stock has a market capitalization of $7.34 billion and a 52-week range of $90.72 to $174.

Snap-on Inc has a ROIC of 14.64%, which is higher than the WACC of 8.71%.

Wall Street sell-side analysts predict Snap-on Inc’s EPS will increase by 10% every year over the next five years compared to the S&P 500’s 4%. Analysts recommend an overweight rating for this stock and have established an average target price of $134.40 per share.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

Rating: 4.0/5 (1 vote)

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Comments

Praveen Chawla
Praveen Chawla premium member - 2 months ago

Good ideas. Currently exploring TLK.

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