When looking for value opportunities amid companies operating in capital-intensive industries, one strategy investors may want to consider is to look 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 appraisal of these businesses mainly stems from tangible assets.
Bayerische Motoren Werke AG
The first stock that qualifies is Bayerische Motoren Werke AG (BAMXF, Financial), a Munich, Germany-based manufacturer of automobiles, parts and accessories.
Bayerische Motoren Werke has a price-to-tangible-book-value ratio of 1.04, which appeals more than the industry median of 1.58 and ranks higher than 67% of 1,066 competitors that operate in the vehicles and parts industry.
The price was $89 per share as of Dec. 28. The tangible book value per share was approximately $85.25 as of the most recent quarter.
The stock price increased by nearly 10% over the past year, determining a market capitalization of $57.78 billion and a 52-week range of $39.90 to $92.45.
GuruFocus assigned a score of 7 out of 10 for both the company's financial strength rating and its profitability rating.
The stock has an overweight recommendation rating with an average target price of $74.60 per share on Wall Street.
Precision Drilling Corp
The second stock that makes the cut is Precision Drilling Corp (PDS, Financial), a Calgary, Canada-based provider of oil and natural gas drilling and related services and products to oil and gas producers.
Precision Drilling Corp's price-to-tangible-book-value ratio of 0.2 appeals more than the industry median of 1.02, ranking higher than 94% of 997 companies that operate in the oil and gas industry.
As of Dec. 28, the stock price was $15.92 per share, while the tangible book value per share was $78.90 as of the recent quarter.
The stock has declined by 42.3% over the past year for a market capitalization of $215.12 million and a 52-week range of $5.44 to $32.80.
GuruFocus assigned a score of 3 out of 10 to the financial strength rating and of 5 out of 10 to the profitability rating of the company.
The stock holds an overweight recommendation rating with an average target price of $22.87 per share on Wall Street.
Covenant Logistics Group Inc
The third stock that meets the criteria is Covenant Logistics Group Inc (CVLG, Financial), a Chattanooga, Tennessee-based provider of truckload transportation and brokerage services operating more than 3,150 tractors and nearly 7,000 trailers in the United States.
Covenant's price-to-tangible-book-value ratio of 1.04 is more compelling than the industry median of 1.28, ranking higher than 57% of 783 companies that operate in the transportation industry.
The stock price was trading at $14.91 per share as of Dec. 28, while the tangible book value per share was $14.39 for the recent quarter.
The stock price has increased by nearly 18% over the past year, determining a market capitalization of $255.47 million and a 52-week range of $6.54 to $20.70.
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 buy recommendation rating with an average target price of $24.25 per share.
Disclosure: I have no position in any security mentioned.
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