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Stock Strategist

Five Consistent Value Creators for a Buck or Less!

In times of uncertainty, a solid book value can be a storm anchor.

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Before anyone gets too excited--no, we are not pitching penny stocks on Morningstar. But we will pitch something much more boring, but infinitely more profitable: book values.

For many traditional value investors, a firm's book value is the penultimate indicator of its true worth--as book value can be defined as the share of the company's assets belonging to shareholders. Thus, buying a company for less than book value can literally mean buying dollars for cents. Legions of investors have profited over decades by buying stocks with low price/book ratios--an ample body of research shows that these stocks tend to outperform over the long run.

Michael Tian has a position in the following securities mentioned above: XEC. Find out about Morningstar’s editorial policies.

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