Donald Yacktman, a well-known value investor and founder of the AMG Yacktman Fund Class I (YACKX), takes the "forward rate of return" into consideration when assessing the attractiveness of a stock. He calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."
Investors may be interested in the following stocks, as their forward rate of return is at least twice the return on 20-year high quality market (HQM) corporate bonds, which stands at 2.96% as of the writing of this article.
Hilton Grand Vacations Inc
The first stock to consider is Hilton Grand Vacations Inc (HGV, Financial), an Orlando, Florida-based timeshare company which develops and operates vacation ownership resorts in the U.S. (including the Hawaiian Islands) and Europe.
Hilton Grand Vacations' forward rate of return (Yacktman) is 13.18% (as of the most recent quarter ended on June 29), which ranks higher than 63% of the 577 companies that are operating in the travel and leisure industry.
Hilton Grand Vacations' share price lost almost 34% over the past year to close at $22.78 on Wednesday for a market cap of $1.94 billion. The 52-week range is $8.28 to $36.56. Its price-earnings ratio is 23.98 (versus the industry median of 23.97), its price-book ratio is 3.71 (versus the industry median of 1.38) and its price-sales ratio is 1.39 (versus the industry median of 1.56).
In the second quarter, Ron Baron (Trades, Portfolio) added 9.7% to his position in the stock to reach his current holding of 228,500 shares.
Gold Fields Ltd
The second stock to consider is Gold Fields Ltd (GFI, Financial), a South African gold mining company.
Gold Fields Ltd's forward rate of return (Yacktman) is 21.49% (as of most recent fiscal year ended on Dec. 30), which ranks higher than 81% of the 381 companies that are operating in the metals and mining industry.
Gold Fields Ltd's share price gained almost 120% over the past year to trade at around $12.34 at close on Wednesday for a market cap of $11.01 billion and a 52-week range of $3.79 to $14.90. Its price-earnings ratio is 44.16 (compared to the industry median of 19.97), its price-book ratio is 3.75 (versus the industry median of 2.38) and its price-sales ratio is 3.32 (versus the industry median of 1.69).
In the second quarter, Ken Heebner (Trades, Portfolio) established a new holding in the stock, purchasing 2,250,000 shares.
Winnebago Industries Inc
The third stock to consider is Winnebago Industries Inc (WGO, Financial), a Forest City, Iowa-based manufacturer and seller of recreational vehicles in North America.
Winnebago Industries' forward rate of return (Yacktman) is 25.21% (as of most recent quarter ended on May 29), which ranks higher than 94% of the 854 companies that are operating in the vehicles and parts industry.
Winnebago Industries' share price rose slightly over the past year by 2.34% to trade at around $50.69 on Wednesday for a market cap of $1.7 billion and a 52-week range of $16.94 to $72.65. Its price-earnings ratio is 31.69 (compared to the industry median of 22.86), its price-book ratio is 2.16 (versus the industry median of 1.3) and its price-sales ratio is 0.77 (compared to the industry median of 0.68).
In the second quarter, Ken Fisher (Trades, Portfolio) established a new holding of 1,055,468 shares in the stoc. Ken Heebner (Trades, Portfolio) bought 395,000 shares, while Joel Greenblatt (Trades, Portfolio) also initiated a position with 9,845 shares.
Disclosure: I have no position in any security mentioned.
Read more here:
- These 3 Stocks Look Like Potential Bargains
- 3 Stocks Shining As Unmissable Opportunities
- 3 Stocks That Could Be Deals
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