A declining market is what value and dividend investors long for. There have been times in the past where I struggled to find stocks worthy of purchasing. In a down market, the challenge is to pick the best available stocks that will maximize my chances of future success. When looking for value priced stocks, the Price-To-Book (P/B) ratio is one that I like to focus on.

P/B is calculated as share price divided by book value per share. Book value is most often calculated as Assets less Liabilities (Equity). However, some people conservatively calculate book value as Assets less Intangibles less Liabilities. I prefer the latter since it excludes goodwill and other intangibles which would be difficult to recover in a liquidation, and that is what I used in the calculations below.

A low P/B ratio could indicate a stock is undervalued or distressed. Since GAAP accounting is mostly based on historical cost, a viable growing company will normally be worth more than its book value. However, there are times when good companies will be punished along with the bad. It is our job as investors to separate the good companies from those that have fundamental problems.

Below are several select companies with a P/B below 2.0 for your consideration:

Consolidated Edison, Inc. (ED) is an electric and gas utility holding company serves parts of New York, New Jersey and Pennsylvania.
P/B: 1.38 | Yield: 4.4%

Chevron Corporation (CVX) is a global integrated oil company (formerly ChevronTexaco) has interests in exploration, production, refining and marketing, and petrochemicals.
P/B: 1.71 | Yield: 3.2%

Nacco Industries, Inc. (NC) operates in the following principal industries: mining, small appliances and specialty retail.
P/B: 1.73 | Yield: 2.0%

Aflac Incorporated (AFL) provides supplemental health and life insurance in Japan (78% of pretax operating profits) and the U.S. Products are marketed at work sites and help fill gaps in primary coverage. It is not unusual to see insurance companies with low P/B ratios since many of their investment assets are carried at values approximating market.
P/B: 1.83 | Yield: 2.3%

Occidental Petroleum Corporation (OXY) is one of the largest oil and gas companies in the U.S., OXY has global exploration and production operations. Its subsidiary, OxyChem, is one of the largest U.S. merchant marketers of chlorine and caustic soda.
P/B: 1.88 | Yield: 2.8%

ConocoPhillips Co. (COP) is one of the largest independent oil and gas exploration and production (E&P) companies in the world, COP spun off its downstream assets in May 2012.
P/B: 1.98 | Yield: 3.2%

P/B is like yield, when it is at an extreme you have to question why it is there. If you determine it is the result of an irrational market movement, a purchase could result in both a higher yield and significant future capital appreciation.