If investors pick stocks with a market capitalization of more than $2 billion but less than 1.5 times book value, they will have a higher chance of unearthing high-quality companies.
Thus, value investors could be interested in the following securities, which have received positive financial strength and profitability and growth ratings from GuruFocus, increasing the likelihood of a successful investment.
Further, sell-side analysts on Wall Street have issued positive recommendation ratings ranging between hold and buy, corroborating expectations of performing securities.
The first company is Westlake Chemical Corp. WLK. Shares of the Houston-based specialty chemicals company closed at $65.44 on Friday for a market capitalization of $8.39 billion.
The price-book ratio of 1.47 is almost in line with the industry median of 1.43, but below slightly more than half of its competitors.
The share price is down only 1.1% so far this year, underperforming the S&P 500 Index by 19.3%. The Peter Lynch chart indicates the stock is not expensive.
Westlake Chemical has a GuruFocus financial strength rating of 5.5 out of 10 and a profitability and growth rating of 7 out of 10.
Wall Street recommends holding the stock with an average target price of $69.15.
Currently, the company pays a quarterly dividend of 26.3 cents per common share, producing a 1.55% dividend yield as of Friday.
The second company is Devon Energy Corp. DVN. Shares of the Oklahoma City-based oil and gas producer closed at $24.25 on Friday for a market capitalization of $9.8 billion.
The price-book ratio of 1.43 is above than the industry median of 0.96, but underperforms more than half of its industry peers.Â
The stock has gained 7.6% so far this year, but underperformed the S&P 500 Index by 10.6%. The Peter Lynch chart indicates the stock is still cheap.
The stock has a GuruFocus financial strength rating of 5.6 out of 10 and a profitability and growth rating of 6 out of 10.
Wall Street recommends an overweight rating for shares of Devon Energy with an average target price of $32.94. The rating means analysts predict the stock will outperform either the industry or the entire market in the coming weeks.
On Dec. 27, the company will pay a quarterly dividend of 9 cents per common share to shareholders of record as of Dec. 13, producing a 1.4% dividend yield as of Friday.
The third company is Diamondback Energy Inc. FANG. Shares of the Midland, Texas-based oil and gas producer closed at $89.99 on Friday for a market capitalization of $14.67 billion.
The price-book ratio of 1.06 is almost in line with the industry median of 0.96 and underperforms over half of its competitors.
The stock is down 3% so far this year, underperforming the S&P 500 Index by 21%. The Peter Lynch chart indicates the stock is not expensive.
The stock has a GuruFocus financial strength rating of 5.1 out of 10 and a profitability rating of 9 out of 10.
Wall Street recommends buying shares of Diamondback Energy with an average target price of $143.59.
Currently, the company pays a quarterly dividend of 18.8 cents per common share, producing a 0.69% dividend yield as of Friday.
Disclosure: I have no positions in any securities mentioned.
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