Top 12 large-cap stocks are selling below book value

Many investors are interested in stocks that sell below the company’s underlying book value. Book value is calculated by subtracting a company’s total liabilities from its total assets. When there is negative news about the company, some stocks may sell at or below its book value. In these scenarios, some investors sell the stock as soon as the negative news comes out and often the book value is not analyzed from the balance sheet. However, these stocks are potentially a good buy for a long-term investment provided the company has a strong pipeline with growing revenue and profitability.

The price-to-book ratio is used to compare the market value of a stock to its book value and is calculated by dividing the stock price by the book value per share. The higher the price-to-book ratio, the higher the premium the market is willing to pay for the company relative to its assets. A low price-to-book ratio can signal a good investment opportunity because book value is a book number and rarely represents the true value of the business. In this article, I will focus on the top 12 large cap stocks that are selling below book value. Use this list as a potential starting point for your analysis. These stocks are selling below their book value and are selected based on the following criteria:

  • Security type: Ordinary actions
  • Market capitalization: Over $1.16 billion
  • P/E (next year estimate): Less than or equal to 15.0
  • Price/book ratio: Less than or equal to 1.0
  • EPS growth (projected next year vs. this year): Greater than or equal to 15.00%
  • EPS growth (expected this year vs. last year): Greater than or equal to 15.00%

The following chart shows the top 12 large-cap stocks that are selling below book value:

1. Genworth Financial (GNW): Genworth is a financial security company. It offers insurance, wealth management, investment and financing solutions. Genworth has a market cap of $2.92 billion. Genworth is currently trading around $5.95 with a 52 week range of $4.80 to $12.55. Revenue growth for the last quarter is 0.77% compared to the same quarter of the previous year. Projected EPS growth for this year is 126% over last year. The P/E estimate for next year is 3.6 and its price-to-book ratio is 0.17. The share posted a price performance of -9.16% for the year 2012.

2. Bank of America (BAC): Bank of America is a financial institution serving individuals, small and medium-sized businesses, corporations and governments with a range of banking, investment, asset management and other financial products and services and risk management. Bank of America has a market capitalization of $89.11 billion. Bank of America is currently trading around $8.27 with a 52-week range of $4.92 to $12.71. Revenue growth for the last quarter is -17.56% compared to the same quarter of the previous year. Projected EPS growth for this year is 6060% over last year. The P/E estimate for next year is 7.8 and its price-to-book ratio is 0.42. The stock shows a price performance of 48.74% for the year 2012.

3. Finance of the regions (RF): Regions provides traditional commercial, retail and mortgage banking, as well as other financial services in the areas of investment banking, asset management, trust, mutual funds, brokerage securities, insurance and other specialized financing. The regions have a market capitalization of $9.53 billion. The regions are currently trading around $6.75 with a 52-week range of $2.82-$7.45. Revenue growth for the last quarter is -8.92% compared to the same quarter of the previous year. Projected EPS growth for this year is 227% over last year. The P/E estimate for next year is 8.7 and its price-to-book ratio is 0.67. The stock posted a price performance of 56.98% for the year 2012.

4. People Inc. (BPOP): Popular is a diversified public bank holding company. The company operates in two markets: Puerto Rico and the continental United States. Popular has a market capitalization of $1.86 billion. Popular is currently trading around $1.81 with a 52-week range of $1.08-$3.23. Revenue growth for the last quarter is -13.24% compared to the same quarter of the previous year. Projected EPS growth for this year is 23.75% over last year. The P/E estimate for next year is 6.4 and its price-to-book ratio is 0.48. The share posted a price performance of 30.22% for the year 2012.

5. Jetblue Airways (JBLU): JetBlue is a passenger airline that operates primarily on point-to-point routes with its fleet of 120 Airbus A320 aircraft and 49 EMBRAER 190 aircraft. JetBlue has a market capitalization of $1.32 billion. JetBlue is currently trading around $4.65 with a 52-week range of $3.40-$6.38. Revenue growth for the last quarter is 22.17% compared to the same quarter of the previous year. Projected EPS growth for this year is 81.03% over last year. The P/E estimate for next year is 7.1 and its price-to-book ratio is 0.74. The share posted a price performance of -10.58% for the year 2012.

6. Southwest Airlines (LUV): Southwest Airlines operates a passenger airline that provides scheduled air transportation in the United States. Southwest Airlines has a market capitalization of $6.21 billion. Southwest Airlines is currently trading around $8.09 with a 52-week range of $7.15-$12.44. Revenue growth for the last quarter is 28.62% compared to the same quarter of the previous year. Projected EPS growth for this year is 59.53% over last year. The P/E estimate for next year is 7.9 and its price-to-book ratio is 0.87. The share posted a price performance of -5.49% for the year 2012.

7. Suntrust Banks (STI): SunTrust is a diversified financial services holding company whose business provides a range of financial services to individuals and businesses. SunTrust has a market capitalization of $13.14 billion. SunTrust is currently trading around $24.42 with a 52 week range of $15.79 to $28.85. Revenue growth for the last quarter is -1.11% compared to the same quarter of the previous year. Projected EPS growth for this year is 72.48% over last year. The P/E estimate for next year is 9.1 and its price-to-book ratio is 0.65. The stock posted a price performance of 37.97% for the year 2012.

8. DIRECTV (DTV): DIRECTV is a provider of digital television entertainment in the United States and Latin America. DIRECTV has a market cap of $32.79 billion. DIRECTV is currently trading around $48.48 with a 52-week range of $39.82-$53.40. Revenue growth for the last quarter is 12.72% compared to the same quarter of the previous year. Projected EPS growth for this year is 26.08% over last year. The P/E estimate for next year is 9 and its price-to-book ratio is -10.68. The share posted a price performance of 13.38% for the year 2012.

9. Rowan Enterprises (ground floor): Rowan is a provider of international and domestic contract drilling services. Rowan has a market capitalization of $4.28 billion. Rowan is currently trading around $34.60 with a 52-week range of $28.13-$42.21. Revenue growth for the last quarter is 31.95% compared to the same quarter of the previous year. Projected EPS growth for this year is 124% over last year. The P/E estimate for next year is 8.7 and its price-to-book ratio is 0.97. The share posted a price performance of 14.08% for the year 2012.

10. Coeur d’Alene Mines (CRC): Coeur is a silver producer with gold production and has assets located in the United States, Mexico, Bolivia, Argentina and Australia. Heart has a market cap of $1.94 billion. Heart is currently trading around $21.60 with a 52-week range of $19.30-$32.09. Revenue growth for the last quarter is 18.94% compared to the same quarter of the previous year. Projected EPS growth for this year is 64.82% over last year. The P/E estimate for next year is 7.8 and its price-to-book ratio is 0.9. The share posted a price performance of -10.52% for the year 2012.

11. Morgan Stanley (MRS): Morgan Stanley is a global financial services company which, through its subsidiaries and affiliates, provides its products and services to a group of customers and customers, including corporations, governments, financial institutions and individuals. Morgan Stanley has a market cap of $34.05 billion. Morgan Stanley is currently trading around $17.21 with a 52 week range of $11.58 to $26.49. Revenue growth for the last quarter is -10.03% compared to the same quarter of the previous year. Projected EPS growth for this year is 16.43% over last year. Next year’s P/E estimate is 7 and its price-to-book ratio is 0.56. The share posted a price performance of 13.75% for the year 2012.

12. Nabors Industries (NBR): Nabors Industries is a land drilling contractor. It is also a land servicing and reconditioning contractor in the United States and Canada. Nabors Industries has a market cap of $5.3 billion. Nabors Industries is currently trading around $16.62 with a 52 week range of $11.05 to $32.41. Revenue growth for the last quarter is 37.63% compared to the same quarter of the previous year. Projected EPS growth for this year is 44.93% over last year. Next year’s P/E estimate is 6.6 and its price-to-book ratio is 0.84. The share posted a price performance of -4.15% for the year 2012.

Disclosure: I have been a BAC for a long time.

Additional disclosure: I can initiate a long position on the stocks mentioned above within the next 72 hours.

Comments are closed.