What do Met Life, Kelly Services and Oasis Petroleum have in common?

Each is selling below book value.

Book value is a company’s net worth (assets minus liabilities), usually expressed as a figure per share of stock outstanding. Buying stocks below book value is a classic bargain hunters’ strategy.

Here are five below-book stocks that I like.

Met Life

The largest U.S. company currently selling below book value is Met Life Inc. (MET), a big life insurance company. Its market value is about $45 billion. Its book value is about $52 billion, and annual revenue runs about $68 billion.

Investing the float — the money that comes in as premiums and hasn’t yet been paid out as claims — is a bread-and-butter item for insurers. Investors have soured on insurers because, with interest rates low on relatively safe bonds, they don’t earn as much investment income as they once did.

To this I say yes, but $17 billion in net investment income (last year’s figure) isn’t so bad. The stock trades at seven times earnings and 0.68 times book value.


Kelly Services Inc. (KELYA) is one of the leading temporary-help companies in the U.S. It has been profitable in 13 of the past 15 years — all but recession-scarred 2008-2009.

Kelly reported good results for its June quarter, but only a so-so September quarter. The stock, at about $22, is trading for only 0.70 times book. Wall Street has all but abandoned coverage.

The company has little debt, and its profit margin has expanded recently.


Especially cheap at 0.26 times book is Oasis Petroleum Inc. (OAS) of Houston. It drills for oil and gas mostly in North Dakota, and also in Montana and Texas. Five to six years ago, Oasis sometimes traded above $50. Today, in the fifth year of a slump for the energy industry, it languishes at $3.10.

Of 32 Wall Street analysts who cover Oasis, 22 rate it a “buy,” and 10 call it a “hold.” Granting that hold ratings are often “sell” ratings in disguise, this is still a strong analyst profile for a company in an out-of-favor industry.

I like it that Oasis has managed to pare its debt some, while increasing production. The stock must be considered a speculation, as the company posted losses in three of the past four years.


Greenbrier Cos. (GBX), out of Lake Oswego, Oregon, manufactures and leases railroad cars. It had been No. 2 in the field behind Trinity Industries. Now, after acquiring rival American Railcar, it is about on a par with Trinity.

For shippers, the railcar companies often function like fleet managers, getting the right number of cars to the right place, hopefully at the right time. While the railcar manufacturing is very capital intensive, the leasing and fleet management business isn’t.

Greenbrier shares trade for 0.87 times book value.


As a speculation, I like Sims Metal Management Inc. (SMSFY), a metals recycler based in Rye, New York, that does business worldwide, especially in the U.S. and Australia.

Sims has posted losses in five of the past 15 years, so it’s not surprising that the stock is cheap. The present price of $6.86 seems to me to discount a lot of woes: 13 times earnings, 0.29 times revenue and 0.87 times book value.

Wall Street doesn’t bother to cover Simms. If the company’s results perk up a bit, some firms might start or resume coverage. That would help the stock, which trades near its price during the Great Recession.

17% average

Since 1998, I’ve written 18 columns on stock selling for a low price-to-book ratio. (Today’s is the 19th.) The average one-year gain on my recommendations in this series has been 17.75%, which is well above the 10.28% average for the Standard & Poor’s 500 Index over the same periods.

Twelve of the 18 columns beat the S&P 500 and 13 were profitable.

Bear in mind that my recommendations are theoretical and don’t reflect actual trades, trading costs or taxes. Their results shouldn’t be confused with the performance of portfolios I manage for clients. And past performance doesn’t predict future results.

Last year, my low price-to-book choices did well, thanks to a 161% gain in Ultra Clean Holdings Inc. (UCTT). My recommendation of Transocean Ltd. (RIG) bombed, with a nearly 45% loss.

In between were Loews Corp. (L), up about 5%, and Bank OZK (OZK) with a 15% gain. The average for my 2018-2019 picks was a gain of 34%, compared with a little less than 16% for the benchmark index.

Disclosure: I own Greenbrier shares personally and for some of my clients.

John Dorfman is chairman of Dorfman Value Investments in Newton Upper Falls, Massachusetts, and a syndicated columnist. He can be reached at jdorfman@dorfmanvalue.com.

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