3 Stock Picks for the Value Investor
- By Alberto Abaterusso
In my opinion, picking U.S.-listed securities that meet the following characteristics represents a solid starting point when in search of potential value opportunities:
The shares are trading near or below their historical median valuations.
The return on invested capital (ROIC) surpasses the weighted average cost of capital (WACC), which suggests the company is creating value for shareholders.
The stock holds optimistic recommendation ratings on Wall Street.
Thus, investors may want to consider the following stocks, as they meet the above criteria.
Criteo SA
The first company that meets the criteria is Criteo SA (NASDAQ:CRTO), a developer of customized advertisements for online retailers in France and internationally.
The share price ($31.20 as of Feb. 11) is above the Peter Lynch earnings line but still below the median historical valuation line ($36.97 as of September quarter), as the chart below exhibits.
The stock has a market capitalization of $1.89 billion and a 52-week price range of $5.89 to $35.01.
Criteo SA has a ROIC of 7.58%, which is nearly 200 basis points above the WACC of 5.62%.
As of February, the stock has three strong buys, eight buys and nine hold recommendation ratings on Wall Street. The average target price is $27.88 per share.
PJT Partners Inc
The second stock that qualifies is PJT Partners Inc (NYSE:PJT), a New York-based provider of various financial advisory and fundraising services to enterprises, financial underwriters, institutional investors and public organizations worldwide.
The share price ($73.79 as of Feb. 11) is above the Peter Lynch earnings line but still below the median historical valuation line ($170.65 as of December quarter), as the chart below shows.
The stock has a market capitalization of $2.83 billion and a 52-week range of $23.63 to $81.82.
PJT Partners Inc has a ROIC of 29.56%, which is more than four times the WACC of 6.30%.
As of February, the stock has one strong buy and one buy recommendation rating on Wall Street. The average target price is $90.40 per share.
Victory Capital Holdings Inc
The third stock that possesses the criteria is Victory Capital Holdings Inc (NASDAQ:VCTR), a San Antonio, Texas-based independent asset management company serving institutional and retail clients in the U.S.
The share price of $25.54 (as of Feb. 11) is trading below not only the median historical valuation line ($35.37 as of September quarter) but also the Peter Lynch earnings line ($39.75 as of September quarter), as the chart below illustrates.
The stock has a market capitalization of $1.73 billion and a 52-week price range of $10.18 to $26.04.
Victory Capital Holdings Inc has a ROIC of 15.75%, which is more than twice the WACC of 6.70%.
As of February, the stock has two strong buys, four buys and three hold recommendation ratings on Wall Street for an average target price of $27.33 per share.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.
