The market drop that started over a year ago has morphed into fears into specific sectors, such as banking. But other industries have likewise dropped to the point where investors can buy $1.00 in assets for less than $1.00.
One measure of a company’s assets is its book value, or the value of its assets per share. Investors may be able to buy up bank shares for far less than book value right now – but that book may include non-performing loans.
In other sectors, the story is different. Media companies have been hit by a slowing economy, which tends to mean fewer advertisers and lower advertising rates. However, some of these companies trade at a fraction of their book value.
For example, Paramount Global (PARA), now trades just under 0.6 times its book value, reflecting a deep discount on its intellectual properties. That bargain likely won’t last.
The media giant has seen shares nearly cut in half over the past year. And while growth has slowed, the company is still creating new media content that can be monetized in time.
Action to take: Investors may like shares here for their upside potential to book value or higher. Plus, Paramount yields 4.6 percent at current prices, a high cash return while waiting.
For traders, shares bottomed out back in December and have been moving higher in choppy trading. The September $25 calls, last going for about $1.70, offer mid-to-high double-digit returns on a continued move higher.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.