When searching for opportunities amid capital-intensive companies, investors can screen the market for stocks whose price to tangible book value ratios are more compelling than peers. This will result in a higher chance of uncovering value opportunities
The price to tangible book value ratio is preferred to the price-book ratio with regards to capital-intensive companies, as the valuation of these businesses mainly stems from tangible or hard assets.
Sibanye Stillwater Ltd
The first stock that meets the above criteria is Sibanye Stillwater Ltd (SBSW, Financial), a South African precious metals producer with mining activities located in North America and South Africa.
Sibanye Stillwater outperforms all of the 1,888 metals and mining companies operating in the industry in terms of a more attractive price to tangible book value ratio of 1.04 compared to the industry median of 2.
As of July 15, the stock trades at a share price of $10.05, and the tangible book value per share is $9.70.
The stock price performed very well over the past year, recording 102.2% growth to a market capitalization of $6.72 billion and determining a 52-week range of $3.16 to $13.27.
The stock holds a buy recommendation rating with an average target price of $11.97 per share on Wall Street.
GuruFocus assigned a positive financial strength rating of 5 out of 10 and a very good profitability rating of 7 out of 10 to the company.
With 4.53% of shares outstanding, VAN ECK ASSOCIATES CORP is the company's top fund holder, followed by Exor Investments (UK) LLP with 1.86% and Jim Simons with 0.94%.
Methanex Corp
The second stock that has the above listed criteria is Methanex Corp (MEOH, Financial), a Canadian producer and supplier of methanol in North America and internationally.
Methanex Corp outperforms 802 out of a total of 1,246 companies operating in the chemicals industry in terms of a more compelling price to tangible book value ratio of 1.15 compared to the industry median of 1.59.
As of July 15, the stock trades at a share price of $20.53 with a tangible book value per share of $17.84.
The stock disappointed its shareholders over the past year as its share price lost more than 50%, determining a market capitalization of $1.56 billion and a 52-week range of $9 to $60.17.
Wall Street sell side analysts issued a hold recommendation rating for the stock with an average target price of $21.65 per share.
GuruFocus assigned a moderate financial strength rating of 4 out of 10 and a very good profitability rating of 7 out of 10 to the company.
With 18.78% of shares outstanding, M&G INVESTMENT MANAGEMENT LTD is the company's top fund holder, followed by FIL Ltd with 6.05% and WELLINGTON MANAGEMENT GROUP LLP with 4.61%.
ICL Group Ltd
The third stock that qualifies is ICL Group Ltd (ICL, Financial), an Israeli global specialty minerals and chemicals company.
ICL Group Ltd beats 117 out of a total of 200 companies operating in the agriculture industry in terms of a more compelling price to tangible book value ratio of 1.26 versus the industry median of 1.47.
As of July 15, the stock trades at a share price of $3.20 with and a tangible book value per share of $2.54.
The stock performed poorly over the past year as it recorded a nearly 37% decline in the share price for a market capitalization of $4.03 billion and a 52-week range of $2.68 to $5.57.
The stock holds an overweight recommendation rating on Wall Street with an average target price of $4.29 per share.
GuruFocus assigned a moderate financial strength rating of 4 out of 10 and a positive profitability rating of 6 out of 10 to the company.
The company's top fund holder is Phoenix Holdings Ltd. with 4.84% of shares outstanding, followed by VANGUARD GROUP INC with 1.55% and Jeremy Grantham with 0.32%.
Disclosure: I have no position in any security mentioned.
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