Given the decent performance of drug and biotech stocks this year, value analysis is the best approach to identify great bargains. Though price-to-earnings (P/E) and price-to-sales (P/S) valuation tools are more commonly used for stock selection, the price-to-book ratio (P/B ratio) is also a fairly handy tool for identifying high-growth companies selling at low prices.

The price-to-book ratio or P/B ratio is the ratio of the market price of a stock to the book value of its equity. P/B ratio is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.

P/B ratio = market capitalization/book value of equity.

This metric can help identify attractively…