The book value of a company’s equity is remarkable not just because it has been a predictive indicator of stock performance over the past 80 years, but also because economists actually agree on the usefulness of the price-to-book (P/B) ratio. Any majority agreement among economists is truly remarkable in light of their dissention: it is said that if all economists were laid end to end, they would never reach a conclusion. Past stock performance has shown that generally, over long periods of time, stocks with lower P/B ratios outperform stocks with higher P/B ratios.

Using the P/B ratio to gauge a stock is useful in many situations. Unlike the P/E ratio, the P/B ratio is effective if a firm has negative or anomalous earnings. Moreover, earnings are volatile and are sometimes gamed by management, which casts doubt on many versions of the P/E ratio. However, the P/B ratio fails to account for internally-developed intellectual property including patents, brands, and trademarks.

Using the P/B ratio as a measure of value, here are five P/B bargains:

Bunge Limited (BG) is a large cap with a P/B ratio of 0.89 that processes foodstuffs in dozens of countries. Its operations are profitable and are cheaply priced at a P/E multiple of 4.60 and a P/S multiple of 0.23 (ttm). Bunge is even cheaper than its attractively priced competitor, Archer-Daniels-Midland Company (ADM), which has higher multiples. ADM trades at a P/B multiple of 1.22, a P/E multiple of 9.73 (ttm),  To continue reading, click here.