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A Trio of Potential Bargain Stocks

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GuruFocus.com
·4 min read
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- By Alberto Abaterusso

Investors in search of bargain opportunities may be interested in the following businesses as their stocks have a low price-to-median price-sales value when compared to that of the S&P 500, which is a benchmark index for the U.S. market. The price-to-median price-sales value of the S&P 500 is around 1.5.


This approach is based on the idea that the stock valuation will revert to its historical (10-year) average in terms of price-sales ratio. In order to calculate it, investors need to perform a quotient between the current share price (numerator) and the trailing 12-month revenue per share times the 10-year median price-sales ratio (denominator).

Wall Street sell-side analysts have also issued positive recommendation ratings for these securities.

Corning

The first stock investors may be interested in is Corning Inc. (NYSE:GLW), a New York-based manufacturer of electronic components for the display technologies, optical communications and life sciences businesses.

Corning's price-to-median price-sales value is 0.97 as of Dec. 31, which ranks higher than 70% of 1,373 companies that operate in the hardware industry.

The company's revenue per share for the trailing 12 months through the most recent quarter was $13.072. Corning's 10-year median price-sales ratio is about 2.84. Thus, the median price-sales value is $37.13.

The stock closed at $36 per share on Thursday for a market capitalization of $27.5 billion and a 52-week range of $17.44 to $38.44.

A Trio of Potential Bargain Stocks
A Trio of Potential Bargain Stocks

Currently, Corning pays quarterly dividends to its shareholders, with the last payment, an unchanged 22 cents per common share, made on Dec. 18, for a trailing 12-month dividend yield of 2.44% as of Dec. 31.

GuruFocus assigned a score of 4 out of 10 to the company's financial strength and 7 out of 10 to its profitability.

Wall Street issued an overweight recommendation rating with an average target price of $37.05 per share for the stock.

TELUS

The second stock investors could be interested in is TELUS Corp. (NYSE:TU), a Vancouver, Canada-based provider of telecommunication products and services.

TELUS's price-to-median price-sales value is 1.03 as of Dec. 31, which ranks higher than 46% of 191 companies that operate in the telecommunication services industry.

The company's revenue per share for the trailing 12 months through the most recent quarter was $8.929. The 10-year median price-sales ratio is 2.1469. Thus, its median price-sales value is $19.17.

The stock price traded at around $19.8 per share at close on Thursday for a market capitalization of $25.54 billion and a 52-week range of $13.54 to $20.91.

A Trio of Potential Bargain Stocks
A Trio of Potential Bargain Stocks

Currently, TELUS pays quarterly dividends to its shareholders with the next payment of 0.311 Canadian dollars (about 24.4 cents) per common share scheduled for Jan. 4, giving a forward dividend yield of 4.92% as of Dec. 31.

GuruFocus assigned a score of 4 out of 10 to the company's financial strength and of 8 out of 10 to its profitability.

Wall Street issued an overweight recommendation rating with an average target price of $20.51 per share for the stock.

Dollar Tree

The third stock investors may be interested in is Dollar Tree Inc. (NASDAQ:DLTR), a Chesapeake, Virginia-based operator of nearly 15,300 discount stores and 24 distribution centers in North America.

Dollar Tree's price-to-median price-sales value is 0.81 as of Dec. 31, which ranks higher than 70% of 159 companies that operate in the defensive retail industry.

The company's revenue per share for the trailing 12 months through the most recent quarter was approximately $105.313. Dollar Tree's 10-year median price-sales ratio is about 1.2631. Therefore, the median price-sales value stands at $133.02.

The stock was trading at around $108.04 per share at close on Thursday for a market capitalization of $25.41 billion and a 52-week range of $60.2 to $114.32.

A Trio of Potential Bargain Stocks
A Trio of Potential Bargain Stocks

Currently, Dollar Tree does not pay dividends.

GuruFocus assigned a score of 5 out of 10 to the company's financial strength and 8 out of 10 to its profitability.

Wall Street issued an overweight recommendation rating with an average target price of $122.23 per share for the stock.

Disclosure: I have no position in any securities mentioned.

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This article first appeared on GuruFocus.