Price to Book Value Ratio

Scan for Stocks With Price-to-Book Ratio Filters

In this section, we will walk you through the steps to use the scan tab in ThinkOrSwim to identify stocks with a Price-to-Book ratio between 0 and 1.0. We'll discuss things like the importance of liquidity filters, option watchlists, etc.

Follow along with our step by step guide to learn how to use thinkorswim to scan for stocks with a low Price-to-Book ratio.

1. Open the scan tab in ThinkOrSwim and remove any existing filters.
2. Select the group of stocks you would like to scan. For example, you might select the "All Optionable" list under the "Category" dropdown.
3. Add a liquidity filter to the scan. This can be done by selecting "Add Filter" and then selecting "Study" from the dropdown list. From there, select "Volume" and then "Average Volume." Set the filter to require the average volume of the stock over the past 50 days to be at least 1 million shares.
4. Add a fundamental filter to focus on the Price-to-Book ratio. Select "Fundamental" from the dropdown list and then select "Price-to-Book value ratio" from the options. Set the minimum value to be greater than zero and the maximum value to be less than 1.0.
5. Run the scan to generate a list of stocks that meet these criteria. You can sort the list by volume to see the stocks with the highest trading volume at the top.

Adding liquidity filters to the scan is important because it ensures that the resulting stocks are tradable and have options.

This is crucial for finding potential opportunities in the market using the Price-to-Book ratio.

By only including liquid stocks in the scan, you can be confident that the stocks you are analyzing are worth further research and can be easily traded if you decide to invest.

 

Building a Price-To-Book Ratio Indicator in ThinkOrSwim

To build a Price-to-Book ratio indicator in ThinkOrSwim, follow these steps:

1. Open the indicator tab in thinkorswim and click on "Create."
2. Define the two variables needed to calculate the Price-to-Book ratio: price and book value. The closing price can be tracked using the "close" keyword, and the book value can be accessed using the "bookvalue" keyword and the "bookvalueperShare" function. For example:

   def current = close;
   def BookValue = BookValuePerShare(getSymbol(), FiscalPeriod.Year);

3. Calculate the Price-to-Book ratio by dividing the closing price by the book value. Assign this value to a new variable called "pb_ratio."

   plot pb_ratio = current/BookValue;

4. To compare the current Price-to-Book ratio to its historical values, you can use websites like Yahoo Finance or koyfin to find the current ratio. You can then compare this value to the plot on the chart to see if the current ratio is significantly different from the historical values.
5. Plot a horizontal line at 1, if you'd like a threshold.

   plot one = 1;

Once you have written the code, click on "OK" to save it and apply it to the chart. The Price-to-Book ratio will now be plotted on the chart along with the stock price, allowing you to compare the current ratio to its historical values and identify potential opportunities.

 

Other Helpful Resources

In this section, we will introduce other websites that can be used to quickly find and compare a stock's Price-to-Book ratio to its historical values. These websites can be a useful alternative to writing custom code in ThinkOrSwim, as they can provide easy access to current and historical Price-to-Book ratio data.

1. Yahoo Finance

One website that can be used for this purpose is Yahoo Finance.

This site provides current and historical financial data for a wide range of stocks, including the Price-to-Book ratio. To find the current Price-to-Book ratio for a stock on Yahoo Finance, simply search for the stock and then click on the "Key Statistics" tab. The current Price-to-Book ratio will be listed under "Valuation Measures."

2. Koyfin

Another website that can be used to find and compare a stock's Price-to-Book ratio is Koyfin.

This is a free financial data and analysis platform that provides current and historical Price-to-Book ratio data for a wide range of stocks. To find the current Price-to-Book ratio for a stock on koyfin, simply search for the stock and then click on the "Valuation" tab. The current Price-to-Book ratio will be displayed in the "PB" column.

One advantage of using these websites to find and compare a stock's Price-to-Book ratio is that it can save time and effort compared to writing custom code in ThinkOrSwim.

However, one potential disadvantage is that these websites may not always provide historical data, allowing you to see current in relation to past data. This is where the edge comes in, when analyzing the price to book ratio in ThinkOrSwim vs. other websites.

 

Conclusion

In conclusion, the Price-to-Book ratio is a valuable tool for identifying potential opportunities in the stock market. By using the scan tab in ThinkOrSwim and custom thinkScript code, you can easily find stocks with a low Price-to-Book ratio and compare their current ratio to its historical values.

Websites like Yahoo Finance and Koyfin can also be useful for quickly finding a stock's current Price-to-Book ratio.

Some key takeaways from this tutorial include:

• The Price-to-Book Ratio is a useful tool for identifying undervalued stocks
• The scan tab in ThinkOrSwim can be used to quickly find stocks with a low Price-to-Book ratio
• Custom thinkScript code can be used to calculate and plot the Price-to-Book ratio on a chart
• Websites like Yahoo Finance and Koyfin can provide easy access to current and historical Price-to-Book ratio data

By following the steps and using the tools outlined in this tutorial, you can gain a better understanding of a stock's valuation and find potential opportunities in the stock market.

I encourage you to try out this tutorial and experiment with the thinkScript code to find your own opportunities using the Price-to-Book ratio.

Take care everyone, and good luck trading!