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James Li
James Li
Articles (1346)  | Author's Website |

4 Good Companies Trading at Fair GuruFocus Value

Stocks with strong fundamentals and attractive valuations based on exclusive method

According to the All-in-One Screener, a Premium feature of GuruFocus, four stocks among the "Good Companies" with fair GuruFocus Valuations are Medifast Inc. (NYSE:MED), Nathan's Famous Inc. (NASDAQ:NATH), Grupo Aeroportuario del Central Norte SAB de CV (NASDAQ:OMAB) and Winmark Corp. (NASDAQ:WINA).

New GF Value feature highlight

The GuruFocus Value Line measures the degree of stock overvaluation or undervaluation based on the following factors:

  1. Historical price multiples that the company has traded at.
  2. An internal adjustment factor based on the company's past growth and returns.
  3. Estimated future growth and performance.

The following video further details the concept of GF Value and how a user can screen for stocks based on it.

GuruFocus provides tools to seek good companies at fair valuations

GuruFocus has said several times that one should buy good companies only, building on Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett (Trades, Portfolio)'s concept of buying "good companies at fair prices." Characteristics of good companies include predictable earnings growth, high returns on invested capital and expanding profit margins.

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Among stocks listed in the "Good Companies" screen, four stocks have a price-to-GF-Value ratio between 0.7 and 1.1, suggesting modest undervaluation or fair valuation. If a stock's price-to-GF-Value ratio falls too low, the stock can become a value trap if financial strength and profitability metrics begin to deteriorate.

Medifast

With a price-to-GF-Value ratio of 0.96, Medifast is fairly valued yet slightly undervalued.

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The Baltimore-based company produces, distributes and sells products concerning weight loss, weight management and healthy living. GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a three-star business predictability rank, a net profit margin that outperforms over 80% of global competitors and three-year earnings per share growth rates outperforming over 95% of global personal service companies.

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Gurus with large holdings in Medifast include Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

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Nathan's Famous

Nathan's Famous is modestly undervalued with a price-to-GF-Value ratio of 0.81.

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The Jericho, New Jersey-based company owns fast-food franchises in the U.S., primarily selling hot dogs directly to foodservice operators and distributors. GuruFocus ranks the company's profitability 8 out of 10, driven by a high Piotroski F-score of 7 and an operating margin that has increased approximately 4.60% per year on average over the past five years and is outperforming over 96% of global competitors.

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Grupo Aeroportuario del Central Norte

Grupo Aeroportuario del Central Norte is modestly undervalued with a price-to-GF-Value ratio of 0.9.

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The Mexico-based company operates 13 airports in the country's central region with approximately 88% of traffic within the country's borders. GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a three-star business predictability rank, expanding operating margins and a three-year revenue growth rate that outperforms over 80% of global competitors.

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Winmark

With a price-to-GF-Value ratio of 1.06, Winmark is slightly overvalued yet still considered fairly valued.

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The Minneapolis-based company franchises and leases value-oriented stores that buy, sell and trade gently-used merchandise. GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank, a high Piotroski F-score of 7, and an operating margin that has increased approximately 1.9% per year over the past five years and is outperforming over 98% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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