It’s hard to imagine that some Nasdaq stocks trade below book value, since the current average price-book ratio for Nasdaq stocks is at just about the highest in recent memory: 4.94. According to y-charts, the average price-book ratio for the index over the past five years is 2.92. The big name stocks trade at even higher levels: Apple (AAPL, Financial), for example, trades at 37 times book. Microsoft (MSFT, Financial) sits at 15 times book. Netflix’s (NFLX, Financial) price-book ratio is 18.91. Amazon (AMZN, Financial) trades at about 15 times book.
Benjamin Graham favored the purchase of companies that had share prices below what you got when you subtracted total assets from total liabilities. He wrote about the concept of “below book value” extensively in "The Intelligent Investor" and in "Security Analysis." Other factors he has cited are important, of course, but that metric is useful to begin with when searching for value in stock markets.
With that in mind, here are four Nasdaq stocks that are currently priced below their book value:
Donegal Group
Donegal Group (DGICA, Financial) is in the property and casualty insurance business with headquarters in Marietta, Pennsylvania. The stock trades at an 18% discount to its book value. The price-earnings ratio is 8.12. Earnings per share growth this year come in at 9.40%.
Over the past five years, the EPS growth rate is 18.70%. The company is paying a 4.43% dividend. Average daily volume is only 52,760 shares, making it an unlikely candidate for large institutional investors who require huge volumes for liquidity.
LCNB
LCNB Corp. (LCNB, Financial) is an Ohio-based bank stock now available for purchase at 89% of book value. It trades with a price-earnings ratio of 10.68. Earnings per share grew 7.50% this year, and the five-year EPS growth rate is a positive 5.80%.
LCNB’s dividend yield comes to 4.48%. Average daily volume is a relatively light 71,340 shares. The GuruFocus.com summary of financials shows two good signs and one severe warning sign.
SSR Mining
SSR Mining (SSRM, Financial) is a gold mining company headquartered in Denver, Colorado with Canadian offices in Vancouver and Toronto. The stock is now trading at a 5% discount from book value. The price-earnings ratio is 13.04.
The earnings per share grew 73.70% this year. SSR has a five-year EPS growth rate of 20.40%. Investors receive a 1.37% dividend yield. The GuruFocus.com financials summary of the company comes up with five good signs, one medium warning sign and one severe warning sign.
First Financial Corporation
First Financial Corporation (THFF, Financial) is a regional bank based in Terre Haute, Indiana. The stock trades at 90% of its book value with a price-earnings ratio of 9.35. Earnings per share this year gained 3.30%. The past five-year EPS growth is 10.80%.
First Financial pays a 2.26% dividend yield. This is another lightly traded Nasdaq bank stock - average daily volume is 63,780 shares. The GuruFocus.com summary of financials shows four good signs and two severe warning signs.”
This list is just a start if you’re looking for possible value stocks during this period of generally high equity valuations. It’s a good idea to read Professor Graham’s work on the subject and to remember what he taught his student, Warren Buffett (Trades, Portfolio), about the art of investing.
