value stocks

 

One of my rules of thumb in equity investing is that if I buy companies trading below tangible book value,  with earnings yields over 10%, it is difficult to lose value, and the odds favor gaining value.

But there are some caveats:

  • Analyze the balance sheet, highly indebted companies are not to be trusted, but that varies by industry.
  • Longer dated assets, like property, plant & equipment should be discounted.
  • Banks and REITs must be scrutinized carefully, because of their weak liability structures.
  • Foreign companies need extra scrutiny, because the disclosures are often not as good.  This goes triple for Chinese companies.
  • Make sure you are not investing in a “buggy whip” industry, particularly in the era of the internet.  How can your company be disrupted?

The idea is a simple one.  Buy companies below their tangible book value when they have good earnings, and good earnings prospects. Over a long enough period of time, the growth in tangible book value will help drive growth in the stock price.

For companies with over $100 million in market capitalization, here are the companies that fit this description:

1, 23  - View Full Page
companytickerimg_desccountryexchg_descP / TBP / EExpected P/EMkt capLT Debt/ Equity
AerCap Holdings N.V.AER0939 – Rental & LeasingNetherlandsN – New York

0.66

7.6

5.2

1524.4

263.6

Aircastle LimitedAYR0939 – Rental & LeasingUnited StatesN – New York

0.64

8.4

8.1

931.2

202.1

American International Group,AIG0715 – Insurance (Property & Casualty)United StatesN – New York

0.55

2.9

9.8

56637

73.6

Anworth MortgageAsset CorporaANH0933 – Real Estate OperationsUnited StatesN – New York

0.94

7.8

7.9

917.8

3.8

Assurant, Inc.AIZ0709 – Insurance (Life)United StatesN – New York

0.74

5.7

6

2992.7

19.6

AXA (ADR)AXAHY0709 – Insurance (Life)FranceO – Over the counter

0.88

7.6

5.8

29204.3

21.5

Axis Capital Holdings LimitedAXS0715 – Insurance(Property & Casualty)BermudaN – New York

0.86

8.3

8.8

4325.9

19.3

AXT, Inc.AXTI1033 – SemiconductorsUnited StatesM – Nasdaq

0.94

7.5

9.9

129

2.8

Banco Bilbao Vizcaya ArgentariBBVA0724 – Money Center BanksSpainN – New York

0.9

8.7

6

34554.8

250.4

Barclays PLC (ADR)BCS0727 – Regional BanksUnited KingdomN – New York

0.42

6.9

3.6

31291.9

44.7

Callon Petroleum CompanyCPE0609 – Oil & Gas OperationsUnited StatesN – New York

0.86

1.7

5.8

171.6

62.6

Chimera Investment CorporationCIM0703 – Consumer Financial ServicesUnited StatesN – New York

0.73

4.6

5.3

2434.6

59.2

China Gerui Adv Mtals Grp LtdCHOP0121 – Iron & SteelChinaM – Nasdaq

0.55

2.3

1.7

157.4

0

China Zenix Auto InternationalZX0415 – Auto & Truck PartsChinaN – New York

0.49

1.8

1.4

127.3

0

Citigroup Inc.C0724 – Money Center BanksUnited StatesN – New York

0.53

7.4

5.8

77291.7

165.3

Corning IncorporatedGLW1024 – Electronic Instruments & ControlsUnited StatesN – New York

0.95

8

8.4

19410

14.7

Crexus Investment CorpCXS0933 – Real Estate OperationsUnited StatesN – New York

0.85

6.6

9.4

779.2

0

Deutsche Bank AG (USA)DB0727 – Regional BanksGermanyN – New York

0.65

7.6

4.7

31543.1

318.7

GeoEye Inc.GEOY0909 – Business ServicesUnited StatesM – Nasdaq

0.8

7.3

8.7

358.5

97.6

Hardinge Inc.HDNG0218 – Misc. Capital GoodsUnited StatesM – Nasdaq

0.74

8

7.4

105.1

4.3

Homex Development Corp. (ADR)HXM0215 – Construction ServicesMexicoN – New York

0.91

8.6

5.5

846.4

85.4

Ingles Markets, IncorporatedIMKTA0957 – Retail (Grocery)United StatesM – Nasdaq

0.91