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, Financial) (RDS.B, Financial), 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, Financial), 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, Financial), 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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