While the market is down and depressed, so are its investors. Back in July, Jason Zweig of the intelligent investor posted an article in which he called bear markets a “gift from the financial gods”. Of course he was writing back when the market was more of a lounging sun bear and less of a hungry, rampaging polar bear but the sentiment still holds. As long as stock prices stay deflated there are fantastic values to be had, it’s just a question of figuring out where, exactly, they are.

I’ve been thinking a lot about book value lately, which is basically the value of all of the assets on a company’s books minus liabilities. It’s essentially a measure of all the company’s “stuff”. It doesn’t paint a very good picture of what a company’s actually worth, as brand recognition and the abilities, education, and experience of the employees obviously don’t factor into that calculation. For example, a consulting company is almost always going to trade at very high price relative to the book value, as the company’s “stuff” is pretty secondary to the service the company can offer. That said, with companies whose “stuff” is primary to their business, a low price to book can be an indication of an artificially low stock price. I ran some screens over the weekend for companies trading at a price to book below 1.0 (that is, companies whose total value in equity is somehow LESS than the value of all of their “stuff”) and amidst the smattering of companies I’ve never heard of and banks destined for buyout, found three stocks that I find particularly intriguing from a valuation point of view. I should say that these aren’t necessarily recommendations for investment, as a low P/B often indicates tough times ahead for the company, but it says something interesting about the state of the economy when companies like these have a stock price intrinsically lower than the value of all the crap sitting around their offices and warehouses. Remember, the keyword in this article’s title is “intriguing,” not “recommended” or “awesome”.

1. Panasonic (PC)

If you didn’t know, Panasonic (formerly Matsushita Electric Industrial Company) is the world’s largest consumer electronics company and, as of today, it’s trading at a price to book of .81. A current ratio of about 1.48 is a little lower than ideal, but the company has operated successfully in that range over the last three years, while the P/E is a respectable 10.15. What’s more, the company’s seen respectable year over year revenuegrowth (about 18%) over the the last fiscal year. Now, as a company that relies on retail sales to drive profits, Panasonic likely won’t be reporting any blockbuster earnings in the next six months as consumers tighten up their pocketbooks, but you have to suspect that so long as the company can stay on solid footing the stock price should correct.

 

2. Boston Scientific (BSX)

Yes, oil prices are down and alternative energy is on everyone’s mind (particularly following Obama’s election), but that doesn’t mean people are going to stop using oil any time soon. They’re not. Conoco’s price to book is currently .76, with a P/E of 3.95 and a PEG ratio of .43. That said, Conoco is liability heavy with a current ratio of .96. With more current liabilities than assets, investors are right to be wary, but Conoco has been operating the last three years with a current ratio under 1.0 and still seen top and bottom line growth. (It’s not particularly impressive growth, but it’s growth.) The company’s ability to make money going forward relies almost entirely on the price of crude; if crude prices stay down, expect Conoco’s stock to do the same. (Completing the second-half of that conditional statement is an exercise left for the reader.)