What are we looking for?
Bargains for value investors in the current market downturn.
More about today's screen
We'll do a simple screen looking for stocks in the S&P/TSX composite that are trading below a price-to-book value of one. Then we'll sort those stocks by price decline over the past month.
Stocks trading below a price-to-book value of one are a favourite of value investors as it can sometimes mean they're paying less than a dollar for a dollar's worth of assets. Of course, investors need to dig into the company's books to determine if the company's assets are really worth what the books say they're worth.
Book value per share is calculated by taking a company's assets minus liabilities and dividing by the shares outstanding. Next you divide the stock price by the book value per share.
What did we find out?
There are 32 stocks trading below a price-to-book value of one currently in the S&P/TSX composite index and many of them have been hammered hard. The average decline for the group over the last month is 16 per cent. The lowest price to book value in the group is Yellow Media Inc. , but investors should be wary given how the company recently slashed its dividend. Analysts are also increasingly bearish and are worried that the company may have to restructure if business conditions worsen.
Scott Adams