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 (HUM, Financial), 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 (CEO, Financial), 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 (OSK, Financial), 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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