Donald Yacktman, one of the most prominent value investors and founder of the AMG Yacktman Fund Class I (YACKX), considers the "forward rate of return" when it comes to establishing whether a security may be appealing or not. Yacktman calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."
The following securities may attract the interest of value investors, as their forward rates of return are at least twice the return on 20-year high quality market (HQM) corporate bonds, which stands at 2.92% as of the writing of this article.
Deere & Co
The first stock to consider is Deere & Co (DE, Financial), a Moline, Illinois-based global manufacturer and supplier of farm and heavy construction machinery.
Deere's forward rate of return is 14.27%, which ranks higher than 67% of 142 companies that operate in the farm and heavy construction machinery industry.
Deere's share price increased by 51.37% over the past year to close at $267.64 on Monday for a market cap of $83.87 billion. The 52-week range is $106.14 to $273.75. Its price-earnings ratio is 30.76 and its price-book ratio is 6.56.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $292.67 per share.
Vanguard Group Inc is the largest fund holder of the company, owning 7.08% of shares outstanding. The investor is followed by BlackRock Inc. with 6.31% of shares outstanding and Wellington Management Group LLP with 4.95% of shares outstanding.
WestRock Company
The second stock to consider is WestRock Company (WRK, Financial), an Atlanta, Georgia-based global manufacturer and seller of paper and packaging solutions.
WestRock's forward rate of return is 18.14%, which ranks higher than 73% of 268 companies that operate in the packaging and containers industry.
WestRock's share price increased by only 1% over the past year to trade at around $42.45 at close on Monday for a market cap of $11.17 billion and a 52-week range of $21.50 to $45.58. Its price-earnings ratio is negative 15.89 and its price-book ratio is 1.04.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $47.09 per share.
Amid the top fund holders of the company, Vanguard Group Inc dominates with 11.16% of shares outstanding. It is followed by BlackRock Inc. with 8.29% of shares outstanding and Price T Rowe Associates Inc with 4.79% of shares outstanding.
Assurant Inc
The third stock to consider is Assurant Inc (AIZ, Financial), a New York-based specialty insurance company focusing on lifestyle and housing solutions for consumers in North America, Latin America and internationally.
Assurant's forward rate of return is 20.59%, which ranks higher than 65% of 231 companies that operate in the insurance industry.
Assurant' share price went down slightly over the past year by less than 1% to trade at around $132.11 on Monday for a market cap of $7.76 billion and a 52-week range of $76.27 to $142.61. Its price-earnings ratio is 19.90 and its price-book ratio is 1.32.
On Wall Street, the stock has a median recommendation rating of buy and an average target price of $152.75 per share.
With 11.41% of shares outstanding, The Vanguard Group Inc. is the leader in the group of top fund holders of the company. It is followed by Price T Rowe Associates Inc with 9.47% of shares outstanding and Blackrock Inc. with 7.06% of shares outstanding.
Disclosure: I have no position in any security mentioned.
Read more here:
- 3 Stocks that Represent Potential Bargains
- 3 Opportunities You Shouldn't Miss
- A Trio of Stocks Trading Below Intrinsic Value
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