Donald Yacktman, a well-known value investor and founder of Yacktman Asset Management (Trades, Portfolio), took the forward rate of return into account when he evaluated the attractiveness of a stock. This valuation ratio is calculated as normalized free cash flow yield plus real growth plus inflation.
Value investors could be interested in the following U.S.-listed equities as their forward rates of return more than double the return on 20-year high-quality market corporate bonds, which is 4.35% as of the time of writing.
Abercrombie & Fitch
The first stock that could be of interest is Abercrombie & Fitch Co. (ANF, Financial), a New Albany, Ohio-based operator of 729 specialty stores in the U.S. and internationally for the sale of apparel, personal care products, intimates and accessories for men, women and children. The company offers its products through various third-party wholesale, franchise and e-commerce channels as well.
Abercrombie & Fitch’s forward rate of return is 16.78%, which ranks higher than 69% of 733 companies that operate in the retail-cyclical industry.
The share price has decreased by 51.70% over the past year to close at $26.73 on Monday for a market cap of $926.12 million. The 52-week range is $18.33 to $48.97. Its price-earnings ratio is 4.37 and its price-book ratio is 1.18.
Vanguard Group Inc. and BlackRock Inc. are among the largest institutional shareholders of the company with 17.70% and 13.94% of shares outstanding.
Cleveland-Cliffs
The second stock that could appeal to value investors is Cleveland-Cliffs Inc. (CLF, Financial), a Cleveland-based iron ore miner and flat-rolled steel producer.
Cleveland-Cliffs' forward rate of return is 21.84%, which ranks higher than 81.9% of the 464 companies that operate in the steel industry.
The share price has risen by 23.74% over the past year to trade at $23.01 at close on Monday for a market cap of $11.77 billion and a 52-week range of $15.81 to $34.04. Its price-earnings ratio is 3.28 and its price-book ratio is 1.85.
Vanguard Group and BlackRock are among the largest shareholders of the company with 8.48% and 7.49% of shares outstanding. FMR LLC follows with 4.06% of shares outstanding.
Regions Financial
The third stock that could be of interest is Regions Financial Corp. (RF, Financial), a U.S. regional bank based in Birmingham, Alabama that focuses on banking and bank-related services for individual and corporate customers located across the South, Midwest and Texas regions of the U.S.
Regions Financial’s forward rate of return is 17.65%, which ranks higher than 52.15% of the 1,254 companies that operate in the banks industry.
The share price was down 9.53% year over year, trading at $20.72 at Monday's close, giving it a market cap of $18.94 billion and a 52-week range of $18.02 to $25.57. Its price-earnings ratio is 8.43 and its price-book ratio is 1.24.
Vanguard Group, BlackRock and State Street Corp. are among the largest institutional shareholders of the company with 11.97%, 10.58% and 6.70% of shares outstanding.
