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Alberto Abaterusso
Alberto Abaterusso
Articles (2618) 

3 Capital-Intensive Stocks to Consider

Their price-to-tangible-book-value ratios draw value investors

December 29, 2020 | About:

When looking for value opportunities amid companies operating in capital-intensive industries, one strategy investors may want to consider is to look 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 appraisal of these businesses mainly stems from tangible assets.

Bayerische Motoren Werke AG

The first stock that qualifies is Bayerische Motoren Werke AG (BAMXF), a Munich, Germany-based manufacturer of automobiles, parts and accessories.

Bayerische Motoren Werke has a price-to-tangible-book-value ratio of 1.04, which appeals more than the industry median of 1.58 and ranks higher than 67% of 1,066 competitors that operate in the vehicles and parts industry.

The price was $89 per share as of Dec. 28. The tangible book value per share was approximately $85.25 as of the most recent quarter.

The stock price increased by nearly 10% over the past year, determining a market capitalization of $57.78 billion and a 52-week range of $39.90 to $92.45.

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

The stock has an overweight recommendation rating with an average target price of $74.60 per share on Wall Street.

Precision Drilling Corp

The second stock that makes the cut is Precision Drilling Corp (NYSE:PDS), a Calgary, Canada-based provider of oil and natural gas drilling and related services and products to oil and gas producers.

Precision Drilling Corp's price-to-tangible-book-value ratio of 0.2 appeals more than the industry median of 1.02, ranking higher than 94% of 997 companies that operate in the oil and gas industry.

As of Dec. 28, the stock price was $15.92 per share, while the tangible book value per share was $78.90 as of the recent quarter.

The stock has declined by 42.3% over the past year for a market capitalization of $215.12 million and a 52-week range of $5.44 to $32.80.

GuruFocus assigned a score of 3 out of 10 to the financial strength rating and of 5 out of 10 to the profitability rating of the company.

The stock holds an overweight recommendation rating with an average target price of $22.87 per share on Wall Street.

Covenant Logistics Group Inc

The third stock that meets the criteria is Covenant Logistics Group Inc (NASDAQ:CVLG), a Chattanooga, Tennessee-based provider of truckload transportation and brokerage services operating more than 3,150 tractors and nearly 7,000 trailers in the United States.

Covenant's price-to-tangible-book-value ratio of 1.04 is more compelling than the industry median of 1.28, ranking higher than 57% of 783 companies that operate in the transportation industry.

The stock price was trading at $14.91 per share as of Dec. 28, while the tangible book value per share was $14.39 for the recent quarter.

The stock price has increased by nearly 18% over the past year, determining a market capitalization of $255.47 million and a 52-week range of $6.54 to $20.70.

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 buy recommendation rating with an average target price of $24.25 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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