The following companies have increased their funds allocated to the purchase of fixed assets significantly over recent years. This trend may signal that these companies are expecting an increase in the demand for their goods and services in the near future, which could produce higher sales.
Wall Street sell-side analysts also recommend these stocks, as they have issued positive ratings.
Caesars Entertainment Inc
The first company that should attract the interest of investors is Caesars Entertainment Inc (CZR, Financial), a Reno, Nevada-based operator of casinos and resorts in the U.S.
Caesars Entertainment purchased property, plant and equipment worth nearly $171 million in full year 2019, growing impressively from $10.6 million invested in full year 2014.
While sales and net earnings are declining this year, Morningstar analystes project they will start growing again over the upcoming years with earnings per share hitting $1.83 on revenues of $10.35 billion in 2022, up 130% and 90%, respectively, compared to estimates for 2020.
Wall Street sell-side analysts recommend a buy rating for this stock and have established an average target price of $52.56 per share.
The stock price closed at $44.72 per share on Monday for a market capitalization of $7.19 billion. The share price rose by 14.6% over the past year.
The price-book ratio of 2.2 is slightly above the industry median of 1.35 and the price-sales ratio of 1.9 exceeds the industry median of 1.43.
KKR & Co Inc
The second company investors may want to consider is KKR & Co Inc (KKR, Financial), a New York-based asset management and real estate investment company.
The company allocated $207.4 million to the purchase of property, plant and equipment in full year 2019, which marks a dramatic growth compared to to $65 million spent in full year 2016.
In 2020, Morningstar analysts expect EPS of $1.51 and revenue of $3.46 billion, which would be lower than 2019 , which saw EPS of $1.67 on revenue of $3.68 billion. However, analysts predict EPS to rise 23.2% to $1.86 in 2021 and 17.2% to $2.18 in 2022. Revenues are forecasted to increase by 19.4% to $4.13 billion in 2021 and by 10% to $4.54 billion in 2022.
Wall Street sell-side analysts recommend a buy rating for this stock and have established an average target price of $40.75 per share.
The stock price traded at $34.79 per share at close on Monday for a market capitalization of $29.40 billion. The share price increased by 35.4% over the past year.
The stock has a price-book ratio of 3.13 versus the industry median of 0.92 and a price-sales ratio of 9.03 compared to the industry median of 6.74.
Harrow Health Inc
The third company that could be of interest to investors is Harrow Health Inc (HROW, Financial), a San Diego, California-based developer of pharmaceutical remedies to treat unmet medical needs in the U.S.
Harrow Health Inc spent $1.4 million in 2019 for the purchase of property, plant and equipment, which represented a dramatic growth from 2017 when the company invested $390,000.
Morningstar analysts expect Harrow Health Inc's EPS to turn positive in 2021 at 21 cents per share, up from a net loss of 27 cents per share which is expected for this year.
Wall Street recommends a buy rating with an average target price of $10.75 per share for the stock.
The share price has risen by 46% over the past year up to $7.36 per share at close on Monday for a market capitalization of $188.78 million.
The stock has a price-book ratio of 12.13 compared to the industry median of 2.32 and a price-sales ratio of 4.37 versus the industry median of 2.69.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Low Price-Book Ratio Stocks to Consider
- 3 Stocks With Low Price-Sales Ratios
- 3 Fast-Growing Small Caps to Consider
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