Donald Yacktman, a prominent value investor and founder of the AMG Yacktman Fund (Trades, Portfolio) Class I (YACKX), takes the "forward rate of return" highly into consideration when appraising the attractiveness of a stock. He calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."
The following three U.S.-listed equities could be of interest to value investors, as their forward rates of return are more than twice the return on 20-year high quality market (HQM) corporate bonds, which is 3.37% as of the writing of this article.
WestRock Company
The first stock that could be of interest to investors is WestRock Company (WRK, Financial), an Atlanta, Georgia-based global manufacturer and seller of paper and packaging solutions.
WestRock Company's forward rate of return is 9.65%, which ranks higher than 58% of 283 competitors that operate in the packaging and containers industry.
WestRock Company's share price has risen by 94.92% over the past year to close at $55.26 on Wednesday for a market cap of $14.72 billion. The 52-week range is $25.44 to $62.03. Its price-sales ratio is 0.83 and its price-book ratio is 1.33.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $64.57 per share.
Vanguard Group Inc is the largest top fund holder of the company with 11.10% of shares outstanding. The asset management firm is followed by Price T Rowe Associates Inc /Md/ with 10.73% of shares outstanding and BlackRock Inc. with 8.35% of shares outstanding.
BorgWarner Inc
The second stock value investors could be interested in is BorgWarner Inc (BWA, Financial), an Auburn Hills, Michigan-based global provider of several technical solutions for electric, hybrid and petrol vehicles.
BorgWarner Inc's forward rate of return is 9.84%, which ranks higher than 71% of 896 peer group companies that operate in the vehicles and parts industry.
BorgWarner Inc's share price has grown by 54.53% over the past year to trade at $51.38 at close on Wednesday for a market cap of $12.37 billion and a 52-week range of $32.32 to $55.55. Its price-earnings ratio is 28.21 and its price-book ratio is 1.94.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $55.22 per share.
Vanguard Group is the largest top fund holder of the company with 10.61% of shares outstanding. The asset management firm is followed by BlackRock Inc. with 10.34% and FMR LLC with 4.78%.
Cemex SAB de CV
The third stock that is drawing the attention of investors is Cemex SAB de CV (CX, Financial), a Mexican producer and distributor of cement and other building materials.
Cemex SAB de CV's forward rate of return is 40.68%, which ranks higher than 98% of 277 companies that operate in the building materials industry.
Cemex SAB de CV's share price has gained 172.60% over the past year to trade at $7.96 at close on Wednesday for a market cap of $11.73 billion and a 52-week range of $2.61 to $8.91. Its price-sales ratio is 0.04 and its price-book ratio is 1.32.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $9.31 per share.
FMR LLC is the leader among the top fund holders of the company with 4.86% of shares outstanding. The asset management firm is followed by Baillie Gifford (Trades, Portfolio) with 2.64% of shares outstanding and Charles Brandes (Trades, Portfolio) with 2.23% of shares outstanding.
Disclosure: I have no position in any security mentioned.
