Monday, October 22, 2012

Top Stocks Selling Below Book Value

Book value, in very simple terms, is what the shareholders would receive for each share if the company sold off all its assets today, paid off all its debts, and distributed all the cash on a pro-rata basis. Therefore if you can buy a stock below its book value, you have reduced one element of risk.

An example is the New York Stock Exchange company Thompson Creek Metals Company (TC), a Denver, Colorado based company which is in the mining and marketing of molybdenum. The stock trades at 25% of book value, 15 times trailing earnings, and 10.6 times forward earnings.

Another stock trading way below book is Petrobras Argentina SA (PZE), the Buenos Aires based company involved in the exploration and production of oil and gas. The stock sells at 43% of book value, and trades at 23.4 times trailing earnings. The forward price to earnings ratio is 4.0. Earnings for the latest quarter spiked by 127% on a 13% rise in revenues.

Photronics Inc. (PLAB) manufactures photomasks used in the manufacture of semiconductors and flat panel displays and trades at 55% of book value. The trailing PE is 9 and the forward PE is 7. Earnings for the latest quarter dropped 2.8%.

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