When in search of value opportunities amid companies operating in capital-intensive industries, one strategy investors should consider is looking for stocks whose price-to-tangible-book-value ratios are more appealing than their peers.
The price-to-tangible-book-value ratio is preferred to the price-book ratio, as the assessment of these companies mainly stems from tangible assets.
Royal Dutch Shell PLC
The first stock that qualifies is Royal Dutch Shell PLC RDS.A RDS.B, a major British-Dutch petrochemical company.
Royal Dutch Shell PLC has a price-to-tangible-book-value ratio of 0.79 (for common stock class A) and 0.75 (for common stock class B), which appeal more than the industry median of 0.83 and rank higher than 55% of 985 competitors that operate in the oil and gas industry.
The price was $26.67 per share of common stock class A and $25.32 per share of common stock class B as of Nov. 6. The tangible book value per was was approximately $33.87 for the quarter that ended in September.
The stock price performed poorly over the past year as it declined about 58.3%, determining a market capitalization of $101.54 billion and a 52-week range of $21.26 to $61.17 for common stock class A and $19.19 to $62.27 for common stock class B.
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 has an overweight recommendation rating with an average target price of $39.34 per share on Wall Street.
Central Japan Railway Co
The second stock that makes the cut is Central Japan Railway Co CJPRY, a Nagoya, Japan-based railroad company.
Central Japan Railway Co's price-to-tangible-book-value ratio of 0.74 is more compelling than the industry median of 1.17, ranking higher than 68% of 780 companies that operate in the transportation industry.
As of Nov. 6, the stock price was $12.81 per share, while the tangible book value per share was $17.32 as of the most recent quarter ended on June 28.
The stock has declined by 38.4% over the past year for a market capitalization of $25.15 billion and a 52-week range of $11.66 to $20.99.
GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.
The stock holds an overweight recommendation rating with an average target price of $15.31 per share on Wall Street.
SEACOR Holdings Inc
The third stock that meets the criteria is SEACOR Holdings Inc CKH, a Fort Lauderdale, Florida-based provider of equipment and services to operators in the offshore oil and gas industry and the marine transportation industry.
SEACOR Holdings Inc's price-to-tangible-book-value ratio of 0.78 is more compelling than the industry median of 0.83, as it ranks higher than 54% of 985 companies that operate in the oil and gas industry.
The stock price was trading at $29.50 per share as of Nov. 6, while the tangible book value per share was $37.99 for the September quarter.
The stock performed poorly over the past 52 weeks as it lost more than 30%, determining a market capitalization of $600.98 million and a 52-week range of $22.23 to $47.70.
GuruFocus assigned a score of 5 out of 10 for both the financial strength rating and the profitability rating of the company.
On Wall Street, the stock has a hold recommendation rating with an average target price of $34.50 per share.
Disclosure: I have no position in any security mentioned.
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