If you want to uncover opportunities in capital-intensive industries, you should screen the market for stocks whose price to tangible book value ratios are more appealing than competitors. This will yield a higher likelihood of discovering value opportunities.
The price to tangible book value is preferred to the price-book ratio with regard to capital-intensive companies, as the valuation of these businesses mainly derives from tangible or hard assets.
Ford Motor
The first stock that qualifies is Ford Motor Co. (F, Financial), the U.S. auto manufacturing giant.
Ford outperforms 611 peers out of a total of 1,030 companies operating in the auto manufacturers industry in terms of a more compelling price to tangible book value ratio of 0.91 compared to the industry median of 1.22.
As of July 31, the stock traded at $6.61 per share, and the tangible book value per share is $7.26.
The stock did not perform well over the past year, as it lost 28.4%, which determined a market capitalization of $26.29 billion and a 52-week range of $3.96 to $10.56.
Wall Street recommends a hold rating with an average target price of $6.68 per share.
GuruFocus assigned a low financial strength rating of 3 out of 10, but a positive profitability rating of 5 out of 10 to the company.
The company's top fund holder is Vanguard Group Inc. with 7.89% of shares outstanding, followed by BlackRock Inc. with 6.16% and Newport Trust Co. with 4.61%.
Pacific Ethanol
The second stock that makes the cut is Pacific Ethanol Inc. (PEIX, Financial), a Sacramento, California-based producer and marketer of low-carbon renewable fuels and alcohol products in the U.S.
Pacific Ethanol outperforms 837 peers out of a total of 1,012 companies operating in the oil and gas industry in terms of a more appealing price to tangible book value ratio of 0.68 compared to the industry median of 0.83.
As of July 31, the stock traded at $2.35 per share with a tangible book value per share of $3.46.
The stock outperformed the U.S. market largely over the past year, posting a nearly 236% gain for a market capitalization of $130.38 million and a 52-week range of $0.22 to $2.78.
Wall Street sell-side analysts issued a buy recommendation rating for the stock and have established an average target price of $4 per share.
GuruFocus assigned a low score of 2 out of 10 to the profitability of the company, but a moderate score of 4 out of 10 with regard to its financial strength.
With 11.06% of shares outstanding, BlackRock is the company's top fund holder, followed by Jim Simons' Renaissance Technologies with 5.14% and Vanguard with 3.05%.
Sasol
The third stock that meets the criteria is Sasol Ltd. (SSL, Financial), a South African coal mining, chemical, oil and gas integrated operator.
Sasol outperforms 771 out of a total of 1,012 companies operating in the oil and gas industry in terms of a more compelling price to tangible book value ratio of 0.39 compared to the industry median of 0.83.
As of July 31, the stock traded at $8.03 per share with a tangible book value per share of $20.59.
The stock did not perform well over the past year as the share price recorded a 60.2% decline. The stock now has a market capitalization of $5.08 billion and a 52-week range of $1.25 to $34.03.
Wall Street recommends a hold rating with an average target price of $8.56 per share.
GuruFocus assigned a moderate financial strength rating of 5 out of 10 and a very good profitability rating of 7 out of 10 to the company.
Disclosure: I have no positions in any securities mentioned.
Read more here:
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