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Top-Yielding Stocks Selling Below Book Value - 20204 views
Imagine that you own shares of a company that has a million shares that are trading for $10 per share. This would give the company a market capitalization of $10 million. Now imagine that if you add up all the assets of the company, such as bank accounts, inventory, equipment and real estate, it comes to $15 million. Adding all the liabilities such as debt and short-term loans amounts to $3 million, so when you subtract the liabilities from the assets, it gives the company a net worth of $12 million.
Divide that number by the million shares and you end up with a $12-per-share book value. That means that if you buy the stock today and the company goes out of business today, you would end up with a $2, or 20%, increase in your investment.
There are various reasons a stock would sell below book value, such as tax selling, a bearish stock market or an industry or sector that falls out of favor. WallStreetNewsNetwork.com has turned up a list of over 25 stocks selling at or below book value, most of which have yields above 3.5%.
One example is Telecom Italia (TI), a large Italian telecom company that provides fixed-line and mobile telecommunications, Internet and media services throughout the country. The Italian government may be suffering, but Italians are still making phone calls. The stock is trading at two thirds of book value and pays a yield of 3.5%. Earnings for the latest quarter were up over 207% on flat revenues. The stock trades at 15 times forward earnings.
Great Plains Energy (GXP) is another discounted stock. This electric utility, which serves Missouri and Kansas, is selling at 87% of book value and sports a yield of 4.3%. Earnings for the latest quarter were up 67% on a 24% revenue increase. It sports a forward price to earnings ratio of 12.
The shares of Brandywine Realty Trust (BDN) are trading at 77% of book and yield 5.5%. This REIT owns office and industrial properties. The stock trades at 8.5 times forward earnings.
For a complete list of the major high yield stocks trading below book value, which can be downloaded, sorted, and updated, visit WallStreetNewsNetwork.com. Fourteen of the stocks have yields above 5%, and four provide yields over 7%.
At the time of publication, author had no positions in stocks mentioned.
Fred Fuld III, the publisher of stock and bond investing blog Stockerblog and founder of WallStreetNewsNetwork, has been in the financial services industry for over 20 years, working as an investment advisor, options market maker at the Pacific Stock Exchange, vice president of a San Francisco money management firm, university faculty member and wholesaler for the New Alternatives Fund (the first environmentally conscious mutual fund). He is the author of the books Investing in Brazil Stocks and The Green Light on Green Stocks.