When looking for value opportunities among capital-intensive businesses, investors may want to consider the three stocks listed below, as their price-to-tangible book value ratios are more appealing than their respective industry medians.
The price-to-tangible book value ratio is preferred to the price-book ratio for these publicly traded companies, as the evaluation of their business mainly derives from tangible assets.
Cemex
The first stock that meets the criteria is Cemex SAB de CV (CX, Financial), a Mexican producer and distributor of cement and other building materials.
Cemex has a price-to-tangible book value ratio of 0.95, which is more appealing than the industry median of 3.12 and ranks higher than 67% of the 24 competitors that operate in the building materials industry.
The share price was approximately $6.43 at close on Oct. 29. The tangible book value per share was approximately $6.78 as of June 29.
The stock has a market capitalization of $9.47 billion and a 52-week range of $3.96 to $9.09.
GuruFocus assigned a score of 5 out of 10 for both the company's financial strength and profitability ratings.
On Wall Street, the stock has a median recommendation rating of buy and an average target price of $9.85 per share.
Precision Drilling
The second stock that makes the cut is Precision Drilling Corp. (PDS, Financial), a Canadian provider of oil and natural gas drilling and related products in North America and several countries in the Middle East.
Precision Drilling's price-to-tangible book value ratio of 0.61 is more appealing than the industry median of 3.68, and it ranks higher than 91% of 427 companies that operate in the oil and gas industry.
The stock closed at $44.26 per share on Oct. 29, while the tangible book value per share was $72.90 as of the September 2021 quarter.
The stock has a market capitalization of $590.23 million and a 52-week range of $12.80 to $50.42.
GuruFocus assigned a score of 3 out of 10 for the company's financial strength rating and a 4 out of 10 rating for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $55.73 per share.
L.B. Foster
The third stock that qualifies is L.B. Foster Co. (FSTR, Financial), a Pittsburgh-based provider of products and services for the rail industry. The company also supports critical infrastructure projects worldwide.
L.B. Foster's price-to-tangible book value ratio of 1.34 appeals more than the industry median of 2.24, ranking better than 60% of 124 companies that operate in the transportation industry.
The stock price was trading at $15.93 per share at close on Oct. 29, while the tangible book value per share was $11.85 as of June 29.
The stock has a market capitalization of $172.59 million and a 52-week range of $13.26 to $19.47.
GuruFocus assigned a score of 5 out of 10 for both the financial strength and profitability ratings of the company.
On Wall Street, the stock has a median recommendation rating of buy and an average target price of $21.25 per share.
