I’m an investment manager and veteran writer about the stock market Opinions expressed by Forbes Contributors are their own.
It’s a pricey market. Yet, amazingly, about 7% of U.S.-traded stocks are selling for book value or less.
Book value is simply a measure of a company’s net worth. The calculation is just like the one you go through to determine your personal net worth. You add up your home equity, investments and other assets. Then you subtract your mortgage, car loan and other liabilities.
With a corporation, there are a few more rules and wrinkles, but the concept remains: Add the assets, subtract the liabilities and you have “book.”
Value pioneer Ben Graham liked to buy stocks selling for book value or less–as have many value investors who followed in his footsteps. Stocks don’t become cheap for no reason, but the risk-reward ratio can often be favorable on these stocks.
Below are four stocks that are selling for book value or less.
A mid-sized engineering and construction company, Tutor Perini (TPC) is based in Sylmar, California. Its stock is volatile; it was up more than 50% a year five times in the past 15 years and it was down 25% or more four times.
Some of Tutor Perini’s specialties are bridges, highways, tunnels, hotels and casinos. It also engages in many other kinds of construction projects. The first three could get a boost if Congress passes an infrastructure bill in the next few months.
Tutor Perini shares go for only 0.74 times book value, and 1.26 times tangible book value. The latter excludes intangible assets such as goodwill. (Goodwill is an accounting entry used when a company acquires another company, paying more than book value for its assets.)