Stocks of Royal Gold Inc. (RGLD, Financial), AstraZeneca PLC (AZN, Financial), Abbott Laboratories (ABT, Financial), Johnson & Johnson (JNJ, Financial), and Walmart Stores (WMT, Financial) are found to lead the list of the stocks that are traded at historical low price/book ratios. We only list the companies with high Business Predictability Rank in this screen. These businesses have been very predictable historically. They could grow their revenue and earnings at steady pace. Currently their stocks are traded at historical low price/book (P/B) ratios. If we believe that the valuation will reverse to the mean over time for them, these stocks will generate above-average returns at lower risk.
Study shows that stocks with low P/B ratios did outperform the market. According to the data published on the website of one of our gurus, Donald Smith, “A study that we conducted with Compustat data showed that from 1951 to 2009 stocks in the lowest price-to-tangible book value decile had the highest long-term returns, delivering a 15.4% return versus 10.7% for the S&P 500.” The results of the study are displayed in the chart below:
Looking through our list of the stocks that are traded at historical low price/book ratios, many of the companies are blue chip companies that our Gurus think are undervalued. Here we just highlighting some of the stocks.
Royal Gold Inc. (RGLD)
Royal Gold Inc. (RGLD) is traded at a P/B ratio of 1.9, close to 10-year low of 1.92. The stock is owned by 8 Gurus we track, including Mario Gabelli and Jean-Marie Eveillard.
Royal Gold Inc. is engaged in the acquisition and management of precious metals royalties. Royal Gold Inc. has a market cap of $2.8 billion; its shares were traded at around $52.05 with a P/E ratio of 54.8 and P/S ratio of 20.5. The dividend yield of Royal Gold Inc. stocks is 0.9%. Royal Gold Inc. had an annual average earnings growth of 26% over the past 10 years. GuruFocus rated Royal Gold Inc. the business predictability rank of 4-star.
Royal Gold Inc. announced record royalty revenue of $45.3 million for the first quarter of fiscal 2011 and net income attributable to Royal Gold stockholders of $11.8 million, or $0.22 per basic share. This compares to royalty revenue of $26.1 million and net income of $7.1 million, or $0.18 per basic share, for the first quarter of fiscal 2010.
AstraZeneca PLC (AZN)
AstraZeneca PLC (AZN) is traded at P/B ratio of 2.8, close to a 10-year low of 2.84. AstraZeneca is owned by eight Gurus, including Joel Greenblatt, John Hussman, and one of the best healthcare mutual fund managers Edward Owens.
AstraZeneca PLC is one of the top five pharmaceutical companies in the world based on sales and is a therapeutic leader in cardiovascular, gastrointestinal, oncology, anesthesia including pain management, central nervous system (CNS) and respiratory products. Astrazeneca PLC has a market cap of $66.4 billion; its shares were traded at around $46.58 with a P/E ratio of 7.9 and P/S ratio of 2. The annual dividend yield of Astrazeneca PLC stocks is about 5%. Astrazeneca PLC had an annual average earnings growth of 18% over the past 10 years. GuruFocus rated Astrazeneca PLC the business predictability rank of 4.5-star.
AstraZeneca has raised its dividends consistently over the past 10 years. The company generates more than $10 billion of cash flow from operations. The dividends payout is about $3.3 billion. It is safe to say the company can continue to pay the dividends.
AstraZeneca has grown its book value per share at a steady pace, averaged 11% over the past 10 years, as shown in the chart below:
Study shows that stocks with low P/B ratios did outperform the market. According to the data published on the website of one of our gurus, Donald Smith, “A study that we conducted with Compustat data showed that from 1951 to 2009 stocks in the lowest price-to-tangible book value decile had the highest long-term returns, delivering a 15.4% return versus 10.7% for the S&P 500.” The results of the study are displayed in the chart below:
Looking through our list of the stocks that are traded at historical low price/book ratios, many of the companies are blue chip companies that our Gurus think are undervalued. Here we just highlighting some of the stocks.
Royal Gold Inc. (RGLD)
Royal Gold Inc. (RGLD) is traded at a P/B ratio of 1.9, close to 10-year low of 1.92. The stock is owned by 8 Gurus we track, including Mario Gabelli and Jean-Marie Eveillard.
Royal Gold Inc. is engaged in the acquisition and management of precious metals royalties. Royal Gold Inc. has a market cap of $2.8 billion; its shares were traded at around $52.05 with a P/E ratio of 54.8 and P/S ratio of 20.5. The dividend yield of Royal Gold Inc. stocks is 0.9%. Royal Gold Inc. had an annual average earnings growth of 26% over the past 10 years. GuruFocus rated Royal Gold Inc. the business predictability rank of 4-star.
Royal Gold Inc. announced record royalty revenue of $45.3 million for the first quarter of fiscal 2011 and net income attributable to Royal Gold stockholders of $11.8 million, or $0.22 per basic share. This compares to royalty revenue of $26.1 million and net income of $7.1 million, or $0.18 per basic share, for the first quarter of fiscal 2010.
AstraZeneca PLC (AZN)
AstraZeneca PLC (AZN) is traded at P/B ratio of 2.8, close to a 10-year low of 2.84. AstraZeneca is owned by eight Gurus, including Joel Greenblatt, John Hussman, and one of the best healthcare mutual fund managers Edward Owens.
AstraZeneca PLC is one of the top five pharmaceutical companies in the world based on sales and is a therapeutic leader in cardiovascular, gastrointestinal, oncology, anesthesia including pain management, central nervous system (CNS) and respiratory products. Astrazeneca PLC has a market cap of $66.4 billion; its shares were traded at around $46.58 with a P/E ratio of 7.9 and P/S ratio of 2. The annual dividend yield of Astrazeneca PLC stocks is about 5%. Astrazeneca PLC had an annual average earnings growth of 18% over the past 10 years. GuruFocus rated Astrazeneca PLC the business predictability rank of 4.5-star.
AstraZeneca has raised its dividends consistently over the past 10 years. The company generates more than $10 billion of cash flow from operations. The dividends payout is about $3.3 billion. It is safe to say the company can continue to pay the dividends.
AstraZeneca has grown its book value per share at a steady pace, averaged 11% over the past 10 years, as shown in the chart below: