With 2019 coming to a close, investors are looking ahead to a new year and are searching for new companies to profit from.
Despite continued headwinds from the U.S.-China trade, worries over a global economic slowdown and a potential recession, investors may find value opportunities among industrial companies that outperformed the Standard & Poor's 500 Index by at least 15% over the past 12 months. As of Dec. 31, the GuruFocus All-in-One Screener, a Premium feature, found several stocks that have a market cap over $5 billion and had a higher return relative to the index for the period. It also looked for companies with a business predictability rank of at least one out of five stars and a price-earnings ratio below 15.
Stocks that met these criteria as of the final day of 2019 were ManpowerGroup Inc. (NYSE:MAN), Oshkosh Corp. (NYSE:OSK) and United Rentals Inc. (NYSE:URI).
The benchmark index posted a return of roughly 30% for the year.
Outperforming the index by approximately 23.81% over the past 12 months, ManpowerGroup has a $5.74 billion market cap; its shares were trading around $97.74 on Tuesday with a price-earnings ratio of 12.25, a price-book ratio of 2.14 and a price-sales ratio of 0.28.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
The Milwakee-based business services company, which provides workforce solutions, has a GuruFocus financial strength rating of 7 out of 10. Although Manpower has issued approximately $193.2 million in new long-term debt over the past three years, it is at a manageable level due to comfortable interest coverage. The robust Altman Z-Score of 4.08 also indicates the company is in good financial health.
The company's profitability scored a 6 out of 10 rating on the back of an expanding operating margin, strong returns and a moderate Piotroski F-Score of 5, which implies business conditions are stable. It also has a one-star business predictability rank. According to Guru Focus, companies with this rank typically see their stocks gain an average of 1.1% per annum over a 10-year period.
Of the gurus invested in ManpowerGroup, Chuck Royce (Trades, Portfolio) has the largest position with 0.38% of outstanding shares. Other top guru shareholders include Joel Greenblatt (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jeff Auxier (Trades, Portfolio).
Beating the benchmark by around 28.63% over the past year, Oshkosh has a market cap of $6.46 billion; its shares were trading around $94.71 on Tuesday with a price-earnings ratio of 11.52, a price-book ratio of 2.49 and a price-sales ratio of 0.8.
According to the Peter Lynch chart, the stock is undervalued.
The company, which is headquartered in Oshkosh, Wisconsin, designs and builds specialty trucks, military vehicles and access equipment. Its financial strength was rated 7 out of 10 by GuruFocus on the back of comfortable interest coverage and a high Altman Z-Score of4.28.
Oshkosh's profitability scored an 8 out of 10 rating, driven by operating margin expansion, strong returns that outperform a majority of competitors and a high Piotroski F-Score of 8, which suggests business conditions are healthy. The company also has a one-star business predictability rank.
With 0.27% of outstanding shares, Mairs and Power (Trades, Portfolio) is the company's largest guru shareholder. Other top guru investors are Pioneer, Jeremy Grantham (Trades, Portfolio), Scott Black (Trades, Portfolio), Greenblatt, Caxton, Steven Cohen (Trades, Portfolio) and Jones.
Topping the S&P 500 by roughly 35.57% in 2019, United Rentals has a $12.65 billion market cap; its shares were trading around $169.31 on Tuesday with a price-earnings ratio of 11.6, a price-book ratio of 3.49 and a price-sales ratio of 1.45.
Based on the Peter Lynch chart, the stock appears to be undervalued.
GuruFocus rated the Stamford, Connecticut-based equipment rental company's financial strength 3 out of 10. As a result of issuing approximately $3.4 billion in new long-term debt over the past three years, United Rentals has poor interest coverage. The low Altman Z-Score of 1.63 also warns that the company could be at risk of going bankrupt.
United Rentals' profitability fared much better, scoring an 8 out of 10 rating on the back of operating margin expansion, strong returns that outperform a majority of industry peers, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
Pioneer is the company's largest guru shareholder with 1.31% of outstanding shares. David Carlson (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Cohen, Jones, Greenblatt, Louis Moore Bacon (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) also own the stock.
Disclosure: No positions.
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This article first appeared on GuruFocus.