5 Big Materials Stocks Trading Below Book Value

Value investors are always looking for stocks that are undervalued, but determining the true value of a stock can be tricky. Investors must consider elements such as earnings potential, growth rate, debt levels and other metrics to figure out how much value a share of stock holds.
 

But is there a simpler way to identify undervalued stocks?
 

One of the simplest ways to identify the value of a stock is by its price to book ratio (P/B). The price to book ratio is calculated by dividing a company’s market capitalization by the combined value of all the company’s assets.
 

In other words, stocks with a P/B under 1.0 are selling for less than the value of the company’s assets.
 

Here are five basic materials stocks with P/Bs under 1.0, according to Finviz.
 

1. Alcoa Inc AA
Alcoa currently sports a 0.94 P/B. Shares of the aluminum giant are down nearly 40 percent this year in the weak commodity environment.

2. Freeport-McMoRan Inc FCX
Global metal miner Freeport-McMoRan has witnessed seen an incredible 69.8 percent decline in share price over the past year. The stock now trades at a P/B of only 0.79.

3. Hess Corp HES
Oil exploration and production company Hess has been hit hard by slumping oil prices, and the stock’s precipitous fall has led to it trading below book value at a 0.75 P/B.

4. National Oilwell Varco Inc NOV
Another victim of the oil collapse, this oil & gas equipment & services leader has had its share price cut in half over the past year and now trades at a P/B of only 0.81.

5. Marathon Oil Corp MRO
Of all the large cap companies in the Basic Materials sector, Marathon Oil is currently trading at the steepest discount to book value. The company’s P/B is now an incredibly low 0.62.