A Trio of Capital-Intensive Stocks to Look At
- By Alberto Abaterusso
If you want to increase your likelihood to unearth opportunities in capital-intensive industries, one method is to scan the market for stocks that are topping their competitors in terms of superior price-to-tangible-book-value ratios.
The price-to-tangible-book-value ratio is preferred to the price-book ratio as a valuation ratio for capital-intensive companies, as the assessment of these businesses mainly derives from tangible or hard assets.
Gevo Inc
The first stock that holds the above criteria is Gevo Inc (NASDAQ:GEVO), an Englewood, Colorado-based renewable fuels producer.
Gevo Inc has a price-to-tangible-book-value ratio of 0.3, which is more compelling than the industry median of 1.68.
As of Oct. 14, the stock price was $1.16 per share, while the tangible book value per share was approximately $3.87.
The stock price underperformed over the past year as it declined 57.7%, determining a market capitalization of $87.85 million, while the 52-week range is $0.46 to $3.18.
GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 1 out of 10 to the company.
The stock has a buy recommendation rating with an average target price of $3.53 per share on Wall Street.
WPX Energy Inc
The second stock that has the criteria is WPX Energy Inc (NYSE:WPX), a Tulsa, Oklahoma-based independent explorer and producer of oil and natural gas.
WPX Energy Inc's price-to-tangible-book-value ratio of 0.57 appeals more than the industry median of 0.86.
As of Oct. 14, the stock price was $4.77 per share, while the tangible book value per share was $8.37.
The stock has declined by 51.5% over the past year for a market capitalization of $2.68 billion and a 52-week range of $1.94 to $14.43.
GuruFocus assigned a score of 3 out of 10 for the financial strength rating and the profitability rating of the company.
The stock holds an overweight recommendation rating with an average target price of $8.69 per share on Wall Street.
Suncor Energy Inc
The third stock that makes the cut is Suncor Energy Inc (NYSE:SU), a Canadian petroleum and gas integrated operator.
Suncor Energy Inc's price-to-tangible-book-value ratio of 0.74 is more appealing than the industry median of 0.86.
As of Oct. 14, the stock price traded at $12.37 per share, while the tangible book value per share was $16.72.
The stock price performance was quite disappointing for the shareholders over the past 52 weeks as it slumped 58.6%, determining a market capitalization of $18.85 billion and a 52-week range of $9.61 to $34.56.
GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10 to the company.
The stock has a buy recommendation rating on Wall Street with an average target price of $21.85 per share.
Disclosure: I have no position in any security mentioned.
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This article first appeared on GuruFocus.