Best Buffett Stocks by Book Value

These are the stocks with the lowest price-to-book ratios in the investor's portfolio.
Author:
Publish date:

One of the classic ratios that investors consider before investing in a stock is the price-to-book ratio, the measure of the stock price in relation to its book value -- in other words, the net worth of the company divided by the number of shares.

So if the company liquidated all assets, paid off all debts and divided up what was left by the number of shares, that would be the book value per share. Many times the book value is very conservative because real estate, which may have been owned for many years, can be carried on the books at cost.

The lower the price-to-book ratio, the better. Investors are looking for a price-to-book as close to 1 as possible (or even lower) as a factor when looking at all the appropriate metrics for a stock.

Stockpickr has reviewed the list of stocks held by Warren Buffett's Berkshire Hathaway and sorted out the stocks with the lowest price-to-book ratios into the

Best Buffett Stocks by Book

.

The Buffett stock with the lowest price-to-book is

Wesco Financial

(WSC) - Get Report

, which is involved in three businesses: property and casualty insurance, furniture rental and steel. It has a price-to-book of 1.1. The company earlier this month reported a 3.8% increase in net earnings. The stock has a price-to-earnings (P/E) ratio of 32 and a yield of 0.4%.

Another low P/B-ratio Buffett stock is

ConocoPhillips

(COP) - Get Report

, which has a price-to-book of 1.5. The company is planning a natural gas pipeline running from Alaska's North Slope to the U.S., which would reportedly be the largest pipeline in the world, at a cost of $42 billion. ConocoPhillips has a P/E of 12.4 , a P/E-to-growth (PEG) ratio of 0.8 and a yield of 2.1%.

ConocoPhillips is also a stock that's liked by money manager and

Forbes

columnist

Ken Fisher

. Fisher, who manages $30 billion, also likes

China Mobile

(CHL) - Get Report

, which has a price-to-book of 7.8,

Schlumberger

(SLB) - Get Report

, with a 7.8 P/B, and

Transocean

(RIG) - Get Report

, which has a 4.6 P/B.

Bank of America

(BAC) - Get Report

, another Buffett stock, has a P/B of 1.5. BofA also has a P/E of 10, a PEG of 1.6 and a yield of 5.7%.

Bank of America is favored by another

Forbes

columnist, the famous contrarian,

David Dreman

. The chairman of Dreman Value Management also likes

Altria Group

(MO) - Get Report

, which has a P/B ratio of 9.3,

Freddie Mac

, with a 1.1 P/B, and

Devon Energy

(DVN) - Get Report

, which has a 1.8 P/B.

To see all 10 of the Warren Buffett stocks with low price-to-book ratios, check out the

Best Buffett Stocks by Book

at Stockpickr.com. And for his entire stockholdings, be sure to visit the

Warren Buffett portfolio

.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for

The Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

click here

to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.