When browsing the market for bargain opportunities in U.S.-listed stocks, consider the following stocks as they meet the criteria below:
- A price-earnings ratio of less than 20.
- A lower enterprise value-to-Ebitda ratio versus the historical mean of the S&P 500 over the past seven years (which is currently 10.54).
- Robust dividend growth exceeding the S&P 500, which saw its dividends per share increase at a compound annual rate of about 0.42% over the past three years through Dec. 31.
Rio Tinto
The first stock that qualifies is Rio Tinto PLC (RIO, Financial), a London-based metals and mining company.
The stock was trading at $77.77 per share at close on Tuesday for a market cap of $123.59 billion, a price-earnings ratio of 6.72 (versus the industry median of 13.04) and an enterprise value-to-Ebitda ratio of 6.02 (versus the industry median of 8.64).
GuruFocus assigned a score of 8 out of 10 to the company's financial strength and 9 out of 10 to its profitability.
Rio Tinto’s three-year dividend growth rate is 18.20% versus the industry median of -12.60%.
On Wall Street, the stock has a median recommendation rating of hold and an average target price of approximately $78 per share.
Freeport-McMoRan
The second stock that makes the cut is Freeport-McMoRan Inc. (FCX, Financial), a Phoenix-based miner of copper, gold, molybdenum, silver and other metals.
The stock closed at $42.36 per share on Tuesday for a market cap of $61.29 billion, a price-earnings ratio of 14.58 (versus the industry median of 13.04) and an enterprise value-to-Ebitda ratio of 6.17 (versus the industry median of 8.64).
GuruFocus assigned a score of 6 out of 10 to the company's financial strength and 7 out of 10 to its profitability.
Freeport-McMoRan's three-year dividend growth rate is 14.50% versus the industry median of -12.60%.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $47 per share.
Tyson Foods
The third stock that meets the criteria is Tyson Foods Inc. (TSN, Financial), a Springdale, Arkansas-based global food company offering beef, chicken and pork products as well as processed, fresh and refrigerated food products to retailers and wholesalers.
The stock closed at $92.44 per share on Tuesday for a market cap of $33.48 billion, a price-earnings ratio of 9.13 (versus the industry median of 18.43) and an enterprise value-to-Ebitda ratio of 6.17 (versus the industry median of 11.16).
GuruFocus assigned a score of 7 out of 10 to the company's financial strength and 9 out of 10 to its profitability.
Tyson Foods' three-year dividend growth rate is 16.50% versus the industry median of -1.20%.
On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $101.91 per share.
