These four stocks, some NASDAQ-traded, some NYSE-listed, are so out-of-favor with investors that each one now trades at less than its book value. That is, when liabilities are subtracted from assets, the price of the stock is less than what’s on the company’s books. Benjamin Graham wrote about finding these types of situations, and they still exist in today's markets, even if they are rare.
Some of these might not be around for a long time, while some might recover or get bought out at a decent price. Some might take off for reasons not yet apparent. These outcomes are not all that different than stocks trading at incredibly high price-earnings ratios of above 50 or so – the difference here is that a patient investor can get in at a discount.
Atlas Air Worldwide
Atlas Air Worldwide (AAWW, Financial)is available for purchase at 5% less than its book value. Operating in the airports and air service sector, the company trades with a price-earnings ratio of just 5.22, signiticantly lower than the Shiller price-earnings rati for the S&P 500, which sits now at 39.14. Earnings per share grew this year at a 218.9% pace. The five-year EPS growth rate is 115.40%.
The debt-to-equity ratio is 1.08, while the debt-to-Ebitda ratio is 2.55. Atlas Air Worldwide is NASDAQ-traded with a relatively light average daily volume of about 522,000 shares. GuruFocus.com’s analysis of the financials shows three good signs, two medium warning signs and two severe warning signs.
Broadwind (BWEN, Financial) is a NASDAQ stock in the specialty industrial machinery field. The stock trades at a 6% discount to book with a price-earnings ratio of 10.14. This year’s earnings per share grew by 68.8%. Over the past five years, earnings increased by 36.10%.
The debt-to-equity ratio is 0.55, while the debt-to-Ebitda ratio is 2.34. Average daily volume is about 716,000. The summary of financials by GuruFocus.com finds four good signs, one medium warning sign and two severe warning signs.
Genworth Financial (GNW, Financial) trades at just 14% of its book value. The NYSE-listed equity has a price-earnings ratio of 1.96. This year, earnings per share increased 59.2%, and the five-year EPS growth comes in at 40.10%.
The debt-to-equity ratio is 0.19, while the debt-to-Ebitda ratio is 1.7. Average daily volume is about 3 million shares. GuruFocus.com gives the company one medium warning sign.
Turqoise Hill Resources
Turqoise Hill Resources (TRQ, Financial) is a Canada-based copper miner. It trades on the NYSE with a price-earnings ratio of 4.07, and the price is only 27% of its book value. Earnings per share are up this year by 370%. The EPS growth rate over the past five years is 5.50%.
The debt-to-equity ratio is 0.42 and the debt-to-Ebitda ratio is 5.93. The financials summary by GuruFocus.com shows four good signs, two medium warning signs and two severe warning signs.
Typically, there’s a problem with equities so undervalued, whether it’s lack of expectations about the future or some short-term issue. It should be noted that none of these four stocks pay a dividend right now. Once in awhile, investors can find a worthwhile gem, since below-book stocks can be bought out so cheaply. The emphasis is on once in a while.