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Alberto Abaterusso
Alberto Abaterusso
Articles (2470) 

A Trio of Capital-Intensive Stocks to Consider

Their price-to-tangible-book-value ratios allure value investors

September 28, 2020 | About:

When looking for value opportunities amid companies operating in capital-intensive industries, investors should screen for stocks whose price to tangible book value ratios are appealing more than their competitors. This should assign a higher likelihood of uncovering value opportunities, in my opinion.

The price-to-tangible-book-value ratio is preferred to the price-book ratio, as the appraisal of these companies mainly derives from tangible assets.

Vermilion Energy Inc

The first stock that qualifies is Vermilion Energy Inc (NYSE:VET), a Canadian acquirer, explorer and developer of petroleum and natural gas resources in North America and internationally.

Vermilion Energy Inc has a price-to-tangible-book-value ratio of 0.5, which appeals more than the industry median of 0.83.

The stock price was $2.38 per share as of Sept. 25, while the tangible book value per share was approximately $4.80 as of the most recent quarter which ended on June 29.

The stock price performed poorly over the past year as it declined nearly 86%, determining a market capitalization of $377.21 million, while the 52-week range is $1.50 to $18.49.

GuruFocus assigned a financial strength rating of 2 out of 10 and a profitability rating of 6 out of 10 to the company.

The stock has a hold recommendation rating with an average target price of $2.38 per share on Wall Street.

Sappi Ltd

The second stock that makes the cut is Sappi Ltd (SPPJY), a South African global manufacturer and seller of paper and paper products.

Sappi Ltd.'s price-to-tangible-book-value ratio of 0.49 is more compelling than the industry median of 0.88.

As of Sept. 25, the stock price was $1.51 per American Depository Receipt (ADR), while the tangible book value per ADR was $3.06 as of the most recent quarter which ended on June 29.

The stock has declined by 39.6% over the past year for a market capitalization of $780.37 million and a 52-week range of $1.07 to $3.45.

GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 6 out of 10 to the company.

The stock holds an overweight recommendation rating with an average target price of $219 per ADR on Wall Street.

Datang International Power Generation Co Ltd

The third stock that meets the criteria is Datang International Power Generation Co Ltd (DIPGY), a Chinese independent power generator and power plant developer in the People's Republic of China.

Datang International Power Generation Co Ltd's price-to-tangible-book-value ratio of 0.67 is more compelling than the industry median of 1.50.

The stock price was trading at $2.75 per American Depository Receipt (ADR) as of Sept. 25, while the tangible book value per ADR was $4.11 as of the most recent quarter which ended on June 29.

The stock did not perform well over the past 52 weeks as it fell by 33.3%, determining a market capitalization of $2.54 billion and a 52-week range of $2.45 to $4.27.

GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10 to the company.

On Wall Street, the stock has a hold recommendation rating with an average target price of 8.05 Chinese yuan (about $1.18) per ADR.

Disclosure: I have no position in any security mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master\\\'s Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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