4 Low Price-Book Ratio Stocks

These companies could be value opportunities

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Aug 09, 2022
Summary
  • General Motors Co., Wells Fargo & Co., BP PLC and Twilio Inc. have market caps exceeding $10 billion and price-book ratios below 1.5.
  • Wall Street likes these stocks.
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Screening for stocks with market caps over $10 billion and price-book ratios near or below 1.5 could provide a good starting point for value investors as they seek to find opportunities among the myriad of U.S.-listed stocks. Thus, value investors may want to consider the following stocks, as they meet the above criteria and are recommended by Wall Street.

General Motors Co.

The first company under consideration is General Motors Co. (

GM, Financial), a Detroit-based designer, manufacturer and seller of trucks, crossovers, automobiles and auto parts and accessories in North America, China, Asia Pacific and internationally.

General Motors Co. was formed out of the bankruptcy of General Motors Corp. in July 2009. The company primarily markets its vehicles under the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun and Wuling brands. In 2021, the company lost its leading position in the U.S., with market share falling 280 basis points to 14.6%, but General Motors is expected to regain the top spot in 2022.

The stock fluctuated between $30.33 and $67.21 over the past 52 weeks and traded at $37.56 on Aug. 8. The market cap was approximately $54.76 billion and the price-book ratio was 0.89. The book value per share of General Motors for the quarter ended June 2022 was $42.64.

The stock price of General Motors fell 30.4% last year, lagging competitors Ford Motor Co. (

F, Financial), whose shares were up 16.9%, and Stellantis N.V. (STLA, Financial), whose shares declined 22.5%.

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GuruFocus assigned a score of 4 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $50.39 per share.

BlackRock Inc. is the company's largest top fund holder with 8.36% of outstanding shares. Vanguard Group Inc. is the second-biggest fund holder with 7.21%, while Capital Research Global Investors follows in third place with 5.57%.

Wells Fargo & Co.

The second company to consider is Wells Fargo & Co. (

WFC, Financial), a San Francisco, California-based major United States bank with total assets of approximately $1.9 trillion, which is almost entirely concentrated in the United States. The company is organized into four main segments: Consumer Banking, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management.

The stock fluctuated between $36.54 and $60.30 over the past 52 weeks and traded at around $43.19 on Aug. 8. The market cap was approximately $163.82 billion and the price-book ratio was 1.04. The book value per share of Wells Fargo & Co. for the quarter ended June 2022 was $41.52.

Adjusted for the dividend, Wells Fargo & Co.'s stock price fell 9.5% last year but outperformed its peers Bank of America Corporation (

BAC, Financial), whose shares fell 15.9%, and Citigroup Inc. (C, Financial), whose shares also fell significantly lower by 25.7%.

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On Sept. 1, Wells Fargo & Co. will pay a quarterly dividend of 30 cents per common share, resulting in a trailing 12-month dividend yield of 2.32% and a forward dividend yield of 2.78% at the time of this writing.

GuruFocus assigned a score of 3 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $52.85 per share.

Vanguard Group Inc. is the company's largest top fund holder with 8.51% of outstanding shares. BlackRock Inc. is the second-biggest fund holder with 7.27%, while FMR LLC follows in third place with 4.82% of the company's outstanding shares.

BP PLC

The third company to consider is BP PLC (

BP, Financial), a London, U.K.-based integrated oil and gas operator with international operations.

The stock fluctuated between $23.39 and $34.30 over the past 52 weeks and traded at around $30.16 on Aug. 8. The market cap was approximately $95.75 billion and the price-book ratio was 1.48. The book value per share of BP PLC for the quarter ended June 2022 was $20.85.

Adjusted for the dividend, BP PLC's stock price rose 25% over the last year, outperforming its peers John Wood Group PLC (

LSE:WG., Financial), whose shares fell 30.2%, and Quadrise Fuels International PLC (LSE:QFI, Financial), whose shares fell by 55.7%.

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On Sept. 23, BP PLC will pay a quarterly dividend of 36 cents per common share, resulting in a trailing 12-month dividend yield of 4.34% and a forward dividend yield of 4.45% at the time of this writing.

GuruFocus assigned a score of 5 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $37.50 per share.

BlackRock Inc. is the company's largest top fund holder with 60.30% of outstanding shares. Arrowstreet Capital is the second-biggest fund holder with 0.79%, while State Street Corp. follows in third place with 0.75% of the company's outstanding shares.

Twilio Inc.

The fourth company to consider is Twilio Inc. (

TWLO, Financial), a San Francisco, California-based operator of a cloud-based communications platform-as-a-service with various application programming interfaces and turnkey solution applications focused on improving customer engagement. These technologies include voice, video, chat and SMS. The company leverages its "Super Network," a global network of carrier relationships, to enable fast and cost-effective communications.

The stock fluctuated between $77.14 and $382.75 over the past 52 weeks and traded at around $86.48 on Aug. 8. The market cap was approximately $15.84 billion and the price-book ratio was 1.43. The book value per share of Twilio Inc. for the quarter ended June 2022 was $59.46.

The share price of Twilio Inc. fell by 77% in the past year, lagging behind companies in similar industries such as Spotify Technology S.A. (

SPOT, Financial), whose shares were down 44.45%, and Match Group Inc. (MTCH, Financial), whose shares were also down 51%.

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GuruFocus assigned a score of 7 out of 10 to the company's financial strength and 3 out of 10 to its profitability.

On Wall Street, the stock has a median recommendation rating of buy and an average target price of $135.41 per share.

Vanguard Group Inc. is the company's largest top fund holder with 7.22% of outstanding shares. FMR LLC is the second-biggest fund holder with 5.83%, while BlackRock Inc. follows in third place with 5.20% of the company's outstanding shares.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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