If you want to increase your chances to unearth opportunities in capital-intensive industries, you should screen the market for stocks that are topping their competitors in terms of superior price-to-tangible-book-value ratios.
The price-to-tangible-book-value ratio is preferred to the price-book ratio as a valuation ratio for capital-intensive companies, as the appraisal of these businesses primarily stems from tangible or hard assets.
Granite Construction Inc
The first stock that meets the above criteria is Granite Construction Inc (GVA, Financial), a Watsonville, California-based infrastructure builder and building materials producer in the United States.
Granite Construction Inc has a price-to-tangible-book-value ratio of 0.88, which is more compelling than the industry median of 1.06.
As of Sept. 9, the stock price was $17.96 per share, while the tangible book value per share was approximately $20.41.
The stock price underperformed over the past year as it lost 44.3%, determining a market capitalization of $839.47 million, while the 52-week range is $8.90 to $37.71.
GuruFocus assigned a positive financial strength rating of 5 out of 10 and another positive profitability rating of 6 out of 10 to the company.
The stock has a hold recommendation rating with an average target price of $17 per share on Wall Street.
AdvanSix Inc
The second stock that has the criteria is AdvanSix Inc (ASIX, Financial), a Parsippany, New Jersey-based producer of polymer resins being sold on U.S. and international markets.
AdvanSix Inc's price-to-tangible-book-value ratio of 0.91 appeals more than the industry median of 1.62.
As of Sept. 9, the stock price was $13.13 per share, while the tangible book value per share was $14.43.
The stock has fallen 50% over the past year for a market capitalization of $368.04 million and a 52-week range of $8.06 to $27.22.
GuruFocus assigned a low financial strength rating of 3 out of 10 and a positive profitability rating of 6 out of 10 to the company.
The stock holds an overweight recommendation rating with an average target price of $20 per share on Wall Street.
Pampa Energia SA
The third stock that makes the cut is Pampa Energia SA (PAM, Financial), an Argentinian generator and distributor of electricity to regulated markets in Argentina.
Pampa Energia SA's price-to-tangible-book-value ratio of 0.77 is more appealing than the industry median of 1.74.
As of Sept. 9, the stock price traded at $11.96 per share, while the tangible book value per share was $15.53.
The stock disappointed its shareholders over the past 52 weeks as it recorded a 23.2% fall in the share price, which determined a market capitalization of $737.57 million and a 52-week range of $8.72 to $19.10.
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.
The stock has a hold recommendation rating on Wall Street with an average target price of $14.45 per share.
Disclosure: I have no position in any security mentioned.
Read more here:
- This Trio Trades Below the Peter Lynch Earnings Line
- A Trio of Stocks Whose Return on Equity Ratios Beat Their Industries
- 3 Stocks Trading Below the Earnings Power Value
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