5 Low Price-to-Book Value Stocks to Buy in May

Core Concept - The article emphasizes the importance of the price-to-book (P/B) ratio as a valuation tool for identifying undervalued stocks with potential for exceptional returns, alongside more commonly used ratios like price-to-earnings (P/E) and price-to-sales (P/S) [1][5]. P/B Ratio Overview - The P/B ratio is calculated by dividing the market price per share by the book value of equity per share, indicating how much investors are willing to pay for a share relative to its book value [1][5]. - A P/B ratio of less than one suggests that a stock is undervalued, while a ratio greater than one indicates it may be overvalued [5][6]. Book Value Definition - Book value represents the total value remaining for shareholders if a company were to liquidate its assets after settling all liabilities, calculated by subtracting total liabilities from total assets [3][4]. Limitations of P/B Ratio - The P/B ratio is particularly useful for industries with tangible assets, such as finance and manufacturing, but may be misleading for companies with high R&D expenses or significant debt [8][9]. Screening Parameters for Investment - Stocks with a P/B ratio lower than the industry median are considered to have potential for price appreciation [10]. - Additional screening criteria include lower P/S and P/E ratios compared to industry medians, a PEG ratio of less than 1, a current price of at least $5, and a minimum average trading volume of 100,000 [11][12][13]. Identified Low P/B Stocks - Centene Corporation (CNC) is highlighted as a diversified healthcare company with a projected 3-5 year EPS growth rate of 11.5% and a Zacks Rank of 2 [14][15]. - CVS Health (CVS) is noted for its integrated pharmacy care services, with a projected EPS growth rate of 11.4% and a Zacks Rank of 2 [15]. - Pfizer (PFE), a major pharmaceutical company, has a projected EPS growth rate of 9.0% and a Zacks Rank of 2 [16]. - StoneCo (STNE), a financial technology provider, boasts a high projected EPS growth rate of 26.3% and a Zacks Rank of 1 [17]. - Banco Santander (SAN), the largest bank in Spain, has a projected EPS growth rate of 8.6% and a Zacks Rank of 2 [18].