When seeking value opportunities amid companies operating in capital-intensive industries, investors may want to screen the market for stocks whose price to tangible book value ratios are more compelling than competitors. This should yield a higher chance of uncovering value opportunities, in my opinion.
With regard to capital-intensive companies, the price to tangible book value ratio is preferred to the price-book ratio, as the assessment of these companies mainly derives from tangible assets.
ArcelorMittal SA
The first stock that meets the above criteria is ArcelorMittal SA (MT, Financial), a Luxembourg-based global steel producing company.
ArcelorMittal SA has a price to tangible book value ratio of 0.41, which is more attractive than the industry median of 0.75.
As of Aug. 19, the stock price trades at $11.80 per share and the tangible book value per share is approximately $28.80.
The stock price underperformed over the past year as it recorded a 12% decline down to a market capitalization of $12.91 billion, determining a 52-week range of $6.64 to $18.89.
GuruFocus assigned a positive financial strength rating of 5 out of 10 and a moderate profitability rating of 4 out of 10 to the company.
The stock holds an overweight recommendation rating with an average target price of $14.89 per share on Wall Street.
Tutor Perini Corp
The second stock that has the above listed criteria is Tutor Perini Corp (TPC, Financial), a Sylmar, California-based construction company serving private and public needs worldwide.
Tutor Perini Corp.'s price to the tangible book value ratio of 0.59 is more compelling than the industry median of 1.07.
As of Aug. 19, the stock price trades at $13.34 per share and the tangible book value per share is $22.60.
The stock has gained nearly 29% over the last 12 months of trading through Aug. 19. As a result, the market capitalization is now $677.3 million and the 52-week range is $2.61 to $19.48.
GuruFocus assigned a positive score of 5 out of 10 for both the financial strength rating and profitability rating of the company.
The stock holds an overweight recommendation rating with an average target price of $17 per share on Wall Street.
Scorpio Tankers Inc
The third stock that qualifies is Scorpio Tankers Inc (STNG, Financial), a seaborne transportation company that ships refined petroleum products globally. It is based in the Principality of Monaco.
Scorpio Tankers Inc.'s price to the tangible book value ratio of 0.35 appeals more than the industry median of 0.89.
As of Aug. 19, the stock price trades at $12.29 per share and the tangible book value per share stands at approximately $35.11.
The stock did not perform well over the past year as it recorded a 53.3% decline in the share price for a market capitalization of $722.74 million and a 52-week range of $11.84 to $40.45.
GuruFocus assigned a low score of 3 out of 10 for both the financial strength rating and profitability rating of the company.
The stock holds an overweight recommendation rating on Wall Street with an average target price of $23.98 per share.
Disclosure: I have no position in any security mentioned.
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