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3 Capital-Intensive Stocks to Consider

GuruFocus.com
·3 min read

- By Alberto Abaterusso

When in search of value opportunities amid companies operating in capital-intensive industries, one strategy investors should consider is looking for stocks whose price-to-tangible-book-value ratios are more appealing than their peers.

The price-to-tangible-book-value ratio is preferred to the price-book ratio, as the assessment of these companies mainly stems from tangible assets.


Royal Dutch Shell PLC

The first stock that qualifies is Royal Dutch Shell PLC (NYSE:RDS.A) (NYSE:RDS.B), a major British-Dutch petrochemical company.

Royal Dutch Shell PLC has a price-to-tangible-book-value ratio of 0.79 (for common stock class A) and 0.75 (for common stock class B), which appeal more than the industry median of 0.83 and rank higher than 55% of 985 competitors that operate in the oil and gas industry.

The price was $26.67 per share of common stock class A and $25.32 per share of common stock class B as of Nov. 6. The tangible book value per was was approximately $33.87 for the quarter that ended in September.

The stock price performed poorly over the past year as it declined about 58.3%, determining a market capitalization of $101.54 billion and a 52-week range of $21.26 to $61.17 for common stock class A and $19.19 to $62.27 for common stock class B.

3 Capital-Intensive Stocks to Consider
3 Capital-Intensive Stocks to Consider
3 Capital-Intensive Stocks to Consider
3 Capital-Intensive Stocks to Consider

GuruFocus assigned a financial strength rating of 4 out of 10 and a profitability rating of 6 out of 10 to the company.

The stock has an overweight recommendation rating with an average target price of $39.34 per share on Wall Street.

Central Japan Railway Co

The second stock that makes the cut is Central Japan Railway Co (CJPRY), a Nagoya, Japan-based railroad company.

Central Japan Railway Co's price-to-tangible-book-value ratio of 0.74 is more compelling than the industry median of 1.17, ranking higher than 68% of 780 companies that operate in the transportation industry.

As of Nov. 6, the stock price was $12.81 per share, while the tangible book value per share was $17.32 as of the most recent quarter ended on June 28.

The stock has declined by 38.4% over the past year for a market capitalization of $25.15 billion and a 52-week range of $11.66 to $20.99.

3 Capital-Intensive Stocks to Consider
3 Capital-Intensive Stocks to Consider

GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.

The stock holds an overweight recommendation rating with an average target price of $15.31 per share on Wall Street.

SEACOR Holdings Inc

The third stock that meets the criteria is SEACOR Holdings Inc (NYSE:CKH), a Fort Lauderdale, Florida-based provider of equipment and services to operators in the offshore oil and gas industry and the marine transportation industry.

SEACOR Holdings Inc's price-to-tangible-book-value ratio of 0.78 is more compelling than the industry median of 0.83, as it ranks higher than 54% of 985 companies that operate in the oil and gas industry.

The stock price was trading at $29.50 per share as of Nov. 6, while the tangible book value per share was $37.99 for the September quarter.

The stock performed poorly over the past 52 weeks as it lost more than 30%, determining a market capitalization of $600.98 million and a 52-week range of $22.23 to $47.70.

3 Capital-Intensive Stocks to Consider
3 Capital-Intensive Stocks to Consider

GuruFocus assigned a score of 5 out of 10 for both the financial strength rating and the profitability rating of the company.

On Wall Street, the stock has a hold recommendation rating with an average target price of $34.50 per share.

Disclosure: I have no position in any security mentioned.

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This article first appeared on GuruFocus.