3 High Forward Rate of Return Stock Picks

GuruFocus.com
·4 min read

- By Alberto Abaterusso

Donald Yacktman, a prominent value investor and patron of the AMG Yacktman Fund (Trades, Portfolio) Class I (YACKX), takes the "forward rate of return" highly into account when he has to appraise the attractiveness of a stock. He calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."


The following U.S.-listed equities may draw the interest of value investors, as their forward rates of return are more than doubling the return on 20-year high quality market (HQM) corporate bonds, which stands at 3.51% as of the writing of this article.

Asbury Automotive Group Inc

The first stock to consider is Asbury Automotive Group Inc (NYSE:ABG), a Duluth, Georgia-based automotive retailer of new and used vehicles, spare parts and related services of vehicle maintenance and repair in the U.S.

Asbury Automotive's forward rate of return is 14.34%, which ranks higher than 75% of 868 peers that operate in the vehicles and parts industry.

Asbury Automotive's share price climbed 279.34% over the past year to close at $206.71 on Wednesday for a market cap of $4 billion. The 52-week range is $44.38 to $216.88. Its price-earnings ratio is 15.75 and its price-book ratio is 4.40.

3 High Forward Rate of Return Stock Picks
3 High Forward Rate of Return Stock Picks

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $181 per share.

BlackRock Inc. is the largest fund holder of the company, owning 15.88% of shares outstanding. The asset management company is followed by David Abrams (Trades, Portfolio) with 11% of shares outstanding and Vanguard Group Inc with 10.35% of shares outstanding.

ABM Industries Inc

The second stock value investors may want to consider is ABM Industries Inc (NYSE:ABM), a New York-based specialty business services provider focusing on janitorial, facilities engineering, parking, mechanical and electrical services as well as vehicle maintenance services.

ABM Industries' forward rate of return is 15.19%, which ranks higher than 64.3% of 644 companies that operate in the business services industry.

ABM Industries' share price has increased by 66.36% over the past year to trade at around $51.82 at close on Wednesday for a market cap of $3.48 billion and a 52-week range of $23.65 to $55.48. Its price-earnings ratio is 78.52 and its price-book ratio is 2.22.

3 High Forward Rate of Return Stock Picks
3 High Forward Rate of Return Stock Picks

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $61.25 per share.

BlackRock Inc., Vanguard Group Inc and State Street Corp are the largest top fund holders of the company, as they own 15.42%, 11.11% and 9.30% of shares outstanding, respectively.

Taylor Morrison Home Corp

The third stock under consideration is Taylor Morrison Home Corp (NYSE:TMHC), a Scottsdale, Arizona-based builder of single-family and multi-family homes in the U.S.

Taylor Morrison's forward rate of return is 23.42%, which ranks higher than 78% of 83 companies that operate in the homebuilding and construction industry.

Taylor Morrison's share price has risen by 204.76% over the past year to trade at $31.39 at close on Wednesday for a market cap of $4.05 billion and a 52-week range of $8.78 to $32.68. Its price-earnings ratio is 17.15 and its price-book ratio is 1.16.

3 High Forward Rate of Return Stock Picks
3 High Forward Rate of Return Stock Picks

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $35.39 per share.

BlackRock Inc. is the leader among the top fund holders of the company with 13.94% of shares outstanding. The asset management firm is followed by FMR LLC with 9.06% of shares outstanding and Vanguard Group Inc with 8.61% of shares outstanding.

Disclosure: I have no position in any security mentioned.

Read more here:

  • 3 Stocks Trading Below the Peter Lynch Fair Value

  • A Trio of Stocks That Could Represent Bargain Opportunities

  • A Trio of Highly Profitable Businesses With Solid Conditions



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This article first appeared on GuruFocus.

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