6 Undervalued Stocks Boosting Book Value

Dollar Tree makes the list

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Sep 24, 2019
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According to the GuruFocus All-In-One Screener, the following companies have grown their book value per share over the past decade.

Book value per share is calculated as total equity minus preferred stock, divided by shares outstanding. Theoretically, it is what shareholders will receive if a company is liquidated. Total equity is a balance sheet item and equal to total assets minus total liabilities. Since the book value per share may not reflect the company’s true value, some investors check the tangible book value to confirm their investment ideas.

The book value per share of Cognizant Technology Solutions Corp. (CTSH, Financial) has grown 19.70% over the last 10 years. The price-book ratio is 3.38 and the price-tangible book value is 6.21.

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The information technology services provider has a market cap of $34.13 billion and an enterprise value of $32.75 billion.

According to the discounted cash flow calculator, the stock is undervalued and is trading with a 20% margin of safety at $61. The share price has been as high as $77.87 and as low as $56.73 in the last 52 weeks. As of Tuesday, the stock was trading 20.64% below its 52-week high and 8.94% above its 52-week low. The price-earnings ratio is 16.74.

With 3.12% of outstanding shares, Dodge & Cox is the company's largest guru shareholder, followed by Al Gore (Trades, Portfolio) with 1.89%, Richard Pzena (Trades, Portfolio) with 1.34% and Jeremy Grantham (Trades, Portfolio) with 0.67%

Southwest Airlines Co.'s (LUV, Financial) book value per share has grown 9.40% over the past decade. The price-book ratio is 3.03 and the price-tangible book value is 3.36.

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The airline has a market cap of $29.29 billion and an enterprise value of $29.83 billion.

According to the DCF calculator, the stock is undervalued and is trading with a 55.69% margin of safety at $54.49. The share price has been as high as $64.02 and as low as $44.28 in the last 52 weeks. As of Tuesday, the stock was trading 14.89% below its 52-week high and 23.06% above its 52-week low. The price-earnings ratio is 12.61.

With 13.61% of outstanding shares, PRIMECAP Management (Trades, Portfolio) is the company's largest guru shareholder, followed by Warren Buffett (Trades, Portfolio) with 9.98%, Barrow, Hanley, Mewhinney & Strauss with 0.21% and the T Rowe Price Equity Income Fund (Trades, Portfolio) with 0.18%

T. Rowe Price Group Inc.'s (TROW, Financial) book value per share has grown 9.70% over the past decade. The price-book ratio is 4.14 and the price-tangible book value is 4.60.

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The asset management company has a market cap of $26.93 billion and an enterprise value of $25.29 billion

According to the DCF calculator, the stock is undervalued and is trading with a 28% margin of safety at $114.34. The share price has been as high as $120.99 and as low as $84.59 in the last 52 weeks. As of Tuesday, the stock was trading 5.50% below its 52-week high and 35.17% above its 52-week low. The price-earnings ratio is 14.38.

With 0.30% of outstanding shares, Pioneer Investments (Trades, Portfolio) is the company's largest guru shareholder, followed by Ron Baron (Trades, Portfolio) with 0.15% and Tom Gayner (Trades, Portfolio) with 0.13%

The book value per share of Dollar Tree Inc. (DLTR, Financial) has grown 22% over the last 10 years. The price-book ratio is 4.51, and the price to tangible book value is 56.38.

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The discount retailer has a market cap of $26.28 billion and an enterprise value of $35.91 billion.

The share price has been as high as $113.67 and as low as $78.78 in the last 52 weeks. As of Tuesday, the stock was trading 2.28% below its 52-week high and 40.99% above its 52-week low. The forward price-earnings ratio is 21.93.

With 2.14% of outstanding shares, Chuck Akre (Trades, Portfolio) is the company's largest guru shareholder, followed by Jim Simons (Trades, Portfolio)’ Renaissance Technologies with 0.61% and Pioneer Investments with 0.41%.

Cummins Inc.'s (CMI, Financial) book value per share has grown 10.70% over the past decade. The price-book ratio is 3.08 and the price-tangible book value is 4.08.

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The company has a market cap of $25.49 billion and an enterprise value of $27.35 billion.

According to the DCF calculator, the stock is undervalued and is trading with a 36% margin of safety at $161.57. The share price has been as high as $175.91 and as low as $29.88 in the last 52 weeks. As of Tuesday, the stock was trading 8.15% below its 52-week high and 29.88% above its 52-week low. The price-earnings ratio is 9.87.

Hotchkis & Wiley is the company's largest guru shareholder with 1.67% of outstanding shares, followed by First Eagle Investment (Trades, Portfolio) with 1.47% and Bill Nygren (Trades, Portfolio) with 1.09%.

The book value per share of PACCAR Inc. (PCAR, Financial) has grown 6.10% over the last 10 years. The price-book ratio is 2.53 and the price to tangible book value is 2.52.

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The manufacturer of light-, medium- and heavy-duty trucks has a market cap of $24.36 billion and an enterprise value of $30.65 billion.

According to the DCF calculator, the stock is undervalued and is trading with a 53.54% margin of safety at $70.32. The share price has been as high as $73 and as low as $53.43 in the last 52 weeks. As of Tuesday, the stock was trading 3.67% below its 52-week high and 31.61% above its 52-week low. The price-earnings ratio is 10.36.

With 0.44% of outstanding shares, Hotchkis & Wiley is the company's largest guru shareholder, followed by Pioneer Investments with 0.32%, the T Rowe Price Equity Income Fund with 0.24% and Mario Gabelli (Trades, Portfolio) with 0.12%.

Disclosure: I do not own any stocks mentioned.

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