Title: Undervalued Stocks Selling Below Book Value, Offering Dividends and Uptrends
In the realm of contemporary finance, the spirit of Benjamin Graham might be examining a certain category of stocks. Known for his seminal works like "Security Analysis" and "The Intelligent Investor," the legendary value investor was a firm believer in undervalued stocks, especially those trading below their book value. If earnings ratios appeared reasonable and the company doled out dividends, these types of securities were considered gold mines.
The beauty of identifying such stocks lies in the fact that today's money managers are wrapped up in the tech stock frenzy, neglecting traditional valuation methods. This means some of these formerly overlooked stocks could potentially surpass their tech counterparts within the next few years, although there are no guarantees.
Top 5 Stocks Trading Below Book Value, Dividend-Paying
ASA Gold and Precious Metals (NYSE: ASA)
The chart demonstrates a steady uptrend in ASA's stock, as evidenced by the November 2024 crossover of the 200-week moving average by the 50-week moving average (red circled). The main obstacle to further price increase is the early 2022 high, hovering just above 23.50 (red dotted line).
Currently, ASA trades at a 2% discount from its book value, boasting a price-earnings ratio of 6.70. The company's market cap is $419 million. Average daily volume is light, with just 53,000 shares changing hands. The latest dividend payment had an ex-date of November 13, 2024, amounting to 0.18%.
Barclays (NYSE: BCS)
The stock witnessed a crossover between the 50-week and 200-week moving averages in March 2024 (red circle). The most recent weekly candlestick displays a "bearish engulfing," signifying a potential start of a pullback.
With a $45.69 billion market cap, Barclays operates in the United Kingdom. Its price-earnings ratio is 8.57, maintaining a 58% discount from book value. The debt-to-equity ratio stands at 2.97, with a dividend of 3.40%.
Dynex Capital (NYSE: DX)
Dynex Capital's stock has trended upward since hitting a low in late 2023 near 8.25. The 50-week moving average breached the 200-week moving average in late September 2024 (red circled). The most recent weekly candlestick suggests a potential beginning of a pullback.
With a market capitalization of $970 million, this real estate investment trust is a component of the Russell 2000. Currently, it trades at 94% of book value, boasting a price-earnings ratio of 9.73. The company's debt-to-equity ratio is 5.62, with it paying a dividend of 13.07%.
General Motors (NYSE: GM)
The 50-week moving average surpassed the 200-week moving average in late October 2024. The most recent bearish engulfing candlestick may be the beginnings of a corrective move. Last year, the stock reached an all-time high of 61, with major resistance at the early 2022 peak of 65.
General Motors is an S&P 500 component with a market capitalization of $54.81 billion. The stock is available at a 19% discount from book value, boasting a price-earnings ratio of 5.32. The company's debt-to-equity ratio is 1.80, paying a dividend of 0.98%.
Mizuho Financial Group (NYSE: MFG)
The stock has been on an upward trend since October 2022, with the 50-week moving average breaking the 200-week moving average in late July 2023 (red circled). The stock peaked in November 2024 at around 5.30.
Mizuho Financial Group is a Japan-based company with a market cap of $61.24 billion. Presently, it trades at 82% of book value, boasting a price-earnings ratio of 11.15. The debt-to-equity ratio for Mizuho Financial Group is 5.97, with earnings this year surging by 27% and growing by 40% over the past five years. The company pays a dividend of 3.47%.
Review these statistics courtesy of FinViz.com, and charts courtesy of Stockcharts.com for further analysis. Check out johnnavin.substack.com for additional commentary and insights on these stocks.
Given the current market situation, where tech stocks are dominating the attention of money managers, investing in undervalued stocks like those with low price-earnings ratios and trading below their book value could offer attractive opportunities. For instance, ASA Gold and Precious Metals, currently trading at a 2% discount from its book value, might outperform its tech counterparts in the future.
With the frenzy around tech stocks, traditional valuation methods might be neglected, but this presents an opportunity for investors who are willing to look beyond the popular trends and invest in stocks with strong fundamentals, such as Barclays, which has a discount of 58% from its book value.
