How to Find Book Value Stocks
A company’s book value is described as the amount of assets a company would have if it went out of business. This amount is reached by subtracting the preferred stock, liabilities and intangible assets that are present from the company’s total assets.Figures that represent book value stocks are usually lower than other stock figures. If you are looking to invest in a business and you want to do so at the lowest rate, this is the figure you want to try to obtain.
Other People Are Reading
Things You'll Need
- Access to a computer or other source of current financial and stock information
Instructions
-
-
1
Determine which companies are showing or have shown a significant drop in share prices within the past year. You are going to be comparing figures, so look at several different ones.
-
2
Check to see if any of the companies you are looking at have not shown any further drops within a shorter period of time (say, three months), and/or are showing signs of currently remaining stable.
-
-
3
Rule out those companies whose share prices are currently ridiculously low. Under $2 should be given a second or third look before you decide whether or not to keep that company in the running; under $1 should automatically see that company dropped from any further consideration.
-
4
Obtain a copy of the remaining companies’ most recent balance sheets. (This may also be called a “profit/loss” sheet or “asset/liability” sheet.) In short, you want to know how much money is coming in and how much money is going out. This should give you a good idea of the companies’ current book value stock prices.
-
5
Compare your figures, and make your decision on which one to invest with based on the comparison.
-
6
Confer with a financial advisor or stockbroker and consider their opinion and advice.
-
7
Invest your money based on the decision that you have reached from all your comparisons and research.
-
1
Tips & Warnings
In today’s unstable economic times, book value stocks are often those stocks that were once considered a good investment but are now considered not as good. They are sometimes referred to as “beaten-down” stocks. So, while the price of a “beaten-down” stock may be low, it still may be risky to invest in a company that might fit this description.
Consult with a certified stockbroker or financial adviser before making any decision concerning purchasing book value stocks. This way, you will have a clearer understanding of what is involved.
