For immediate release
Chicago, IL – April 28, 2022 – Stocks in this week’s article are Signet Jewelers Limited SIG, Vishay Intertechnology VSH, Group 1 Automotive GPI, Teck Resources Ltd. TEAK and TD SYNNEX Corp. SNX.
Improve your portfolio with these 5 low-priced stocks compared to the book
When considering valuation metrics, the Price/Earnings (P/E) ratio has always been the obvious choice because earnings-based calculations are easy and convenient. However, in the case of companies that are incurring losses or are in an early development cycle, generating little or no profit, the price-to-sales (P/S) ratio is a good valuation measure to identify stocks. cheap.
Along with the P/E and P/S, the price-to-book ratio (P/B ratio) is also an easy-to-use tool for focusing on low-priced stocks that have high growth prospects.
The P/B ratio is used to calculate how much an investor should pay for each dollar of a stock’s book value. It is calculated by dividing the current closing share price by the last quarter’s book value per share.
The P/B ratio helps identify low-priced stocks that have high growth prospects. Signet Jewelers Limited, Vishay Intertechnology, Group 1 Automotive, Teck Resources Ltd. and TD SYNNEX Corp. are some of those choices.
Now let’s understand the concept of book value.
What is the book value?
Book value is the total value that would remain, according to the company’s balance sheet, if it went bankrupt immediately. In other words, it’s what shareholders would theoretically receive if a company liquidated all of its assets after settling all of its liabilities.
It is calculated by subtracting the total liabilities from the total assets of a business. In most cases, this equates to common shareholders’ equity on the balance sheet. However, according to the company’s balance sheet, intangible assets must also be subtracted from total assets to determine book value.
Understanding the P/B ratio
By comparing the book value of equity to its market price, we get an idea if a company is undervalued or overvalued. However, like the P/E or P/S ratio, it is always best to compare P/B ratios within industries.
An AP/B ratio of less than one means the stock is trading at a price below its book value, or the stock is undervalued and therefore a good buy. Conversely, a stock with a ratio greater than one can be interpreted as being overvalued or relatively expensive.
For example, a stock with a P/B ratio of 2 means we pay $2 for every $1 of book value. Thus, the higher the P/B, the more expensive the stock.
But there is a caveat. An AP/B ratio of less than one can also mean that the company is getting low or even negative returns on its assets or that the assets are overvalued, in which case the stock should be avoided as it can destroy shareholder value. Conversely, the price of the stock may be significantly high – thereby pushing the P/B ratio to more than one – in the likely event that it has become a buyout target, reason enough to hold the stock. .
Moreover, the P/B ratio is not without limits. It is useful for businesses – like finance, investments, insurance and banking or manufacturing companies – with many liquid/tangible assets on the books. However, this can be misleading for companies with large R&D expenses, high debt, service companies, or those with negative earnings.
In any case, the ratio is not particularly relevant as a stand-alone number. Other ratios such as P/E, P/S and debt/equity should be analyzed before making a reasonable investment decision.
Here are our five picks from the 13 stocks that qualified the selection:
Bookmark Jewelers is a retailer of diamond jewelry, watches and other products.
Signet Jewelers forecasts an EPS growth rate of 8% over 3-5 years. Signet Jewelers currently has a Zacks rank #2 and a value score of A. You can see the full list of today’s Zacks #1 Rank stocks here.
Vishay Intertechnology is a global manufacturer and supplier of semiconductors and passive components. Vishay Intertechnology is benefiting from its strength in its resistor, diode, MOSFET, capacitor, inductor and optic product lines, as well as expanding manufacturing capabilities.
Vishay Intertechnology forecasts an EPS growth rate of 22.7% over 3 to 5 years. Vishay Intertechnology currently has a Zacks Rank #2 and a Value Score of A.
Teak Resources is a diversified resource company engaged in mining and mining development with business units focused on steel, coal, copper, zinc and energy.
Teck Resources forecasts an EPS growth rate of 38.7% over 3 to 5 years. TECK currently has a Zacks rank #1 and a value score of A.
Group 1 Automotive is a leader in automobile distribution. Through its dealerships, the company sells new and used cars and light trucks. In addition to the sale of new and used vehicles, Group 1 Automotive offers vehicle financing, insurance and service contracts.
Group 1 Automotive has an expected EPS growth rate of 10.7% over 3 to 5 years. He currently has a Zacks rank of No. 2 and a value score of A.
TD SYNNEX is a leading business process services company. The company was previously known as SYNNEX Corporation. But it changed its name to TD SYNNEX in September 2021, following its merger with Tech Data Corporation.
TD SYNNEX forecasts an EPS growth rate of 10.4% over 3 to 5 years. TGT currently has a Zacks rank #2 and a value score of B.
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For the rest of this article on Screen of the Week, please visit Zacks.com at: https://www.zacks.com/stock/news/1908714/enhance-your-portfolio-with-these-5-low-price-to-book-stocks
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5 shares ready to double
Each was handpicked by a Zacks expert as the #1 preferred stock to earn +100% or more in 2021. Previous recommendations have skyrocketed +143.0%, +175.9%, + 498.3% and +673.0%.
Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.