Donald Yacktman, a well-known value investor and founder of the AMG Yacktman Fund (Trades, Portfolio), takes the "forward rate of return" highly into account when he wants to evaluate the attractiveness of a stock. He calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."
Value investors could be interested in the following four U.S.-listed equities, as their forward rates of return are more than doubling the return on 20-year high-quality market corporate bonds, which is 3.14% as of the writing of this article.
Smith & Wesson Brands Inc.
The first stock that could be of interest to investors is Smith & Wesson Brands Inc. (SWBI, Financial), a Springfield, Massachusetts-based manufacturer and global seller of firearms.
Smith & Wesson Brands Inc.'s forward rate of return is 17.02%, which ranks higher than 89% of 162 companies that operate in the aerospace and defense industry.
The share price has increased by 19% over the past year to close at $18.35 on Thursday for a market cap of $886.21 million. The 52-week range is $14.50 to $39.61. Its price-earnings ratio is 3.37 and its price-book ratio is 2.54.
BlackRock Inc., Jim Simons (Trades, Portfolio) and Vanguard Group Inc. are among the largest fund holders of the company with 7.73%, 7.33% and 7.23% of shares outstanding, respectively.
Zumiez Inc.
The second stock that could appeal to value investors is Zumiez Inc. (ZUMZ, Financial), a Lynnwood, Washington-based operator of specialty stores in North America and internationally, selling apparel, footwear, accessories and related to skateboarding.
Zumiez Inc.'s forward rate of return is 27.37%, which ranks higher than 88% of 721 companies that operate in the retail-cyclical industry.
The share price has gained 27.70% over the past year to trade at $47.11 at close on Thursday for a market cap of $1.08 billion and a 52-week range of $35.57 to $55.10. Its price-earnings ratio is 9.61 and its price-book ratio is 2.07.
BlackRock Inc. is the largest top fund holder of the company with 14.44% of shares outstanding. The asset management firm is followed by Vanguard Group Inc. with 9.21% and Massachussetts Financial Services Co with 6.99%.
Tecnoglass Inc.
The third stock that could be of interest to value investors is Tecnoglass Inc. (TGLS, Financial), a Barranquilla, Colombia-based manufacturer of architectural glass, windows and related products in aluminum. These products are supplied to commercial and residential construction industries in the Americas.
Tecnoglass Inc.’s forward rate of return is 6.39%. Though lower than 60% of 279 companies in the building materials industry, it is more than double the return on 20-year high-quality market corporate bonds.
The share price has risen by 249.43% over the past year to trade at $21.56 at close on Thursday for a market cap of $1.03 billion and a 52-week range of $5.89 to $34.90. Its price-earnings ratio is 15.29 and its price-book ratio is 4.36.
American Century Companies Inc., the Small-Cap Value Fund and Portolan Capital Management, LLC, are the largest amid the top fund holders of the company with 4.44%, 3.77% and 2.97% of shares outstanding, respectively.
