The book value of a stock, in simple terms, is what a shareholder would get per share if all the assets of the company were sold off, all the debts were paid off, and the remaining cash were distributed among all the shareholders.

The ratio that is used to measure this is the price-to-book ratio. The lower the number, the better. It means that you are buying the company's net assets at a lower price. If the price-to-book is below 1, it means that the shares are selling for less than the the net worth of the company.

Here are some stocks with a price-to-book below 1 and market caps over $500 million.

Rite Aid Corporation (RAD), selling at $1.32, has a market cap of $1.1 billion and a price-to-book of 0.88.

Qimonda AG (QI), priced at $1.72, has a market cap of $588.2 million and a price-to-book of 0.20.

Sanmina-SCI (SANM) trades at $1.74 and has a market cap of $922.3 million and a price-to-book of 0.78.

3Com (COMS) trades at $1.87 and has a market cap of $757.9 million and a price-to-book of 0.76.

Graphic Packaging Holding (GPK) trades at $2.25 and has a market cap of $768.7 million and a price-to-book of 0.86.

United Microelectronics (UMC) trades at $2.51 and has a market cap of $6.3 billion and a price-to-book of 0.95.

Semiconductor Manufacturing International (SMI) trades at $2.68 and has a market cap of $996.6 million and a price-to-book of 0.36.

Blockbuster (BBI) trades at $2.78 and has a market cap of $548.4 million and a price-to-book of 0.96.

Coeur d'Alene Mines (CDE) trades at $2.81 and has a market cap of $1.5 billion and a price-to-book of 0.92.

If you like low-priced stocks, you should also check out Why Now Is the Best Time to Look for Stocks Below $10 and Highest-Yielding Stocks Under $5 a Share.

Posted on Aug. 6, 2008


A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

Stocks related to drilling the Marcellus Shale

MLPS with yields above 7%

Microcaps trading for less than tangible book

Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other
hedge fund managers on my list.