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Alberto Abaterusso
Alberto Abaterusso
Articles (2610) 

3 Stocks that Represent Potential Bargains

They trade at enticing valuations

November 12, 2020 | About:

When screening for bargain opportunities, investors may want to pay attention to stocks matching the following criteria, as they could represent value opportunities:

  • A price-earnings ratio below 20
  • A compelling enterprise-value-to-Ebitda ratio when compared to the historical low ratio of the S&P 500 over the past six and a half years (which stands at around 10.54 as of the writing of this article)
  • A solid dividend growth rate surpassing the S&P 500's real dividend per share compound annual growth rate (CAGR) of 5.03% over the past three years through Sept. 30.

Humana Inc

The first stock that makes the cut is Humana Inc (NYSE:HUM), a Louisville, Kentucky-based healthcare plans company.

The stock price traded at $426 per share at close on Wednesday for a market cap of $56.38 billion, a price-earnings ratio of 13.65 (versus the industry median of 17.01), and an enterprise-value-to-Ebitda ratio of 8.65 (versus the industry median of 9.39).

GuruFocus assigned a score of 6 out of 10 to the company's financial strength rating and of 8 out of 10 to its profitability rating.

Humana Inc currently pays dividends to its shareholders at a pace of 62.5 cents per common share every quarter and has increased them by a CAGR of 36.23% over the past three years (versus the industry median of 6.4%). The next payment will be sent out to the company's shareholders on Jan. 29, 2021, for a forward dividend yield of 0.59% as of Nov. 11.

On Wall Street, the stock has an overweight recommendation rating with an average target price of $470.79 per share.

CNOOC Ltd

The second stock that makes the cut is CNOOC Ltd (NYSE:CEO), a Hong Kong-based explorer and producer of oil and gas.

The stock price closed at $112.58 per share on Wednesday for a market cap of $50.26 billion, a price-earnings ratio of 8.68 (versus the industry median of 11.23) and an enterprise-value-to-Ebitda ratio of 5.78 (versus the industry median of 8.31).

GuruFocus assigned a score of 6 out of 10 to the company's financial strength rating and of 7 out of 10 to its profitability rating.

CNOOC Ltd currently pays a semiannual cash dividend of $2.575 per share with the last payment made on Oct. 23, for an impressive 7.47% trailing 12-month dividend yield as of Nov. 11. The company has increased its dividend per share by a CAGR of 25% over the past three years, while the industry median stands at 2.2%.

On Wall Street, the stock has an overweight recommendation rating with an average target price of $133.54 per share.

Oshkosh Corp

The third stock that qualifies is Oshkosh Corp (NYSE:OSK), an Oshkosh, Wisconsin-based designer, builder and seller of specialty vehicles and vehicle bodies.

The stock price was trading at $73.49 per share at close on Wednesday for a market cap of $5.01 billion, a price-earnings ratio of 15.57 (versus the industry median of 18.99) and an enterprise-value-to-Ebitda ratio of 8.7 (versus the industry median of 10.04).

GuruFocus assigned a score of 6 out of 10 to the company's financial strength rating and of 7 out of 10 to its profitability rating.

Oshkosh Corp currently pays a 33 cents per common share quarterly cash dividend to its shareholders, with the next payment to release on Nov. 30, for a forward dividend yield of 1.8% as of Nov. 11. The company has increased the dividend per share by an impressive CAGR of 12.5% on average every year over the past three years, even though it is still a bit below the industry median of 13%.

On Wall Street, the stock has an overweight recommendation rating with an average target price of $86.27 per share.

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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