Investors looking for bargains may want to consider the following three businesses, as their stocks have a low price-to-median-price-sales-value when compared to the average of the S&P 500 (which stands at 1.54 as of the writing of this article).
This approach is based on the idea that the stock valuation will revert to its historical (10-year) average in terms of the price-sales ratio. The ratio has the current share price as the numerator and the trailing twelve-month revenue per share times the 10-year median price-sales ratio as the denominator.
Wall Street is also optimistic about these companies, as sell-side analysts have issued positive recommendation ratings for them.
CarMax Inc
The first stock to consider is CarMax Inc (KMX, Financial), a Richmond, Virginia-based retailer of used vehicles in the U.S.
CarMax Inc's price-to-median-ps-value is 1.34 as of Jan. 25, which ranks higher than 33% of companies that operate in the vehicles and parts industry.
CarMax Inc' revenue per share for the trailing twelve months ended in November 2020 stood at $113.383. CarMax Inc has a 10-Year Median price-sales ratio of about 0.7943. Thus, the median price-sales value is $90.06 as of Jan. 25.
The stock price traded at $120.96 per share at close on Monday for a market capitalization of $19.66 billion and a 52-week range of $37.59 to $124.91.
CarMax Inc does not pay dividends.
GuruFocus assigned a score of 4 out of 10 to the financial strength and of 7 out of 10 to the profitability of the company.
Wall Street recommends a median rating of overweight with an average target price of $119.42 per share for the stock.
Tractor Supply Co
The second stock to consider is Tractor Supply Co (TSCO, Financial), a Brentwood, Tennessee-based retail farm and ranch store operator in the U.S.
Tractor Supply Co' price-to-median-ps-value is 1.20 as of Jan. 25, which ranks higher than 38% of companies that operate in the retail - cyclical industry.
Tractor Supply Co' revenue per share for the trailing twelve months ended in September 2020 stood at $84.392. Tractor Supply has a 10-year median price-sales ratio of 1.5383. Thus, its median price-sales value is $129.82 as of Jan. 25.
The stock price was trading at $156.14 per share at close on Monday for a market capitalization of $18.19 billion and a 52-week range of $63.89 to $160.83.
Currently, Tractor Supply pays quarterly dividends to its shareholders with the last distribution of 40 cents per common share made on Dec. 8, for a trailing 12-month dividend yield of 0.96% as of Jan. 25.
GuruFocus assigned a score of 6 out of 10 to the company's financial strength and of 9 out of 10 to its profitability.
Wall Street recommends a median rating of overweight for the stock with an average target price of $159.54 per share.
Ulta Beauty Inc
The third stock under consideration is Ulta Beauty Inc (ULTA, Financial), a Bolingbrook, Illinois-based beauty retail chain company.
Ulta Beauty Inc's price-to-median-ps-value is 0.97 as of Jan. 25, which ranks higher than 53% of companies that operate in the retail - cyclical industry.
Ulta Beauty Inc's revenue per share for the trailing twelve months ended in October 2020 stood at $110.269. Ulta Beauty Inc has a 10-year median price-sales ratio of about 2.7522. Therefore, the median price-sales value is $303.48 as of Jan. 25.
The stock price was trading at $295.74 per share on Monday for a market capitalization of $16.66 billion and a 52-week range of $124.05 to $310.49.
Ulta Beauty Inc has not distributed dividends since 2012.
GuruFocus assigned a score of 6 out of 10 to the financial strength and of 9 out of 10 to the profitability of the company.
Wall Street recommends a median rating of overweight with an average target price of $302.42 per share for the stock.
Disclosure: I have no position in any security mentioned.
Read more here:
- A Trio of Stocks Trading Near the GuruFocus Value Line
- 3 Attractive Magic Formula Stocks
- A Trio of Stocks Trading Below Intrinsic Value
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