When Cheap Stock Prices Hide Real Trouble: Three Low Book Value Stocks to Reconsider

Spotting undervalued securities seems like a straightforward investment strategy—look for stocks trading below their book value and grab them before the market corrects its mispricing. But here’s where many investors stumble: the market often has good reasons for steep markdowns. Three companies currently trading well below their account values—Tilray Brands (NASDAQ: TLRY), Walgreens Boots Alliance (NASDAQ: WBA), and Kraft Heinz (NASDAQ: KHC)—illustrate why rock-bottom valuations can signal opportunity… or danger.

Tilray Brands: The Cannabis Conundrum at 0.4x Book Value

Start with a sobering fact: Tilray Brands has shed 91% of its market value in three years, collapsing from roughly $17 billion in 2021 to just $1.5 billion today. Yet even at these levels, the company trades at only 0.4 times its book value—a discount so steep it screams “deal” to bargain hunters.

The reality is messier. Cannabis operators routinely face asset write-downs as plant values fluctuate, making traditional accounting metrics nearly useless for valuation. More concerning is Tilray’s operational health: while quarterly losses narrowed from $120 million to $15.4 million in recent periods, the company continues hemorrhaging cash. The marijuana side of the business remains unprofitable, forcing reliance on its alcoholic beverage operations to carry growth.

Yes, federal legalization could spark a dramatic rebound. But that’s speculation on a binary event with no timeline. Given unprofitable operations, cash burn, and a valuation that’s cheap precisely because investors see limited near-term catalysts, Tilray looks like a textbook value trap rather than a contrarian opportunity.

Walgreens Boots Alliance: The Pharmacy Chain’s Downward Spiral

Pharmacy retailer Walgreens has experienced something even more dramatic—a decades-low valuation of just 0.7 times book value. The trigger? A $5.8 billion write-down on its VillageMD primary care investment earlier this year.

That failed bet tells the story. Walgreens bet big on transforming itself into a healthcare destination by embedding primary care clinics in stores. The strategy hasn’t materialized into growth, and the company’s balance sheet shows the damage: operating losses in three of the last four quarters. The business appears trapped in a downward cycle—cheap enough to attract interest, yet fundamentally broken enough to keep disappointing investors who dare to buy.

This isn’t a value opportunity. It’s a value trap with momentum, and the stock seems engineered to find new lows regardless of how attractive the price tag appears.

Kraft Heinz: The Exception That Proves the Rule

Here’s where the pattern breaks. Kraft Heinz trades at 0.9 times book value—still a discount, but not the bargain-basement depths of its peers. And crucially, the company’s situation differs fundamentally.

Inflation and private label competition are real headwinds, and flat revenue ($26-27 billion range over four years) has bred investor skepticism. But Kraft isn’t in operational distress. The conglomerate owns powerhouse brands with pricing power and established market positions. Management is actively hunting for growth angles: plant-based mac and cheese rollouts, the $25 billion Lunchables school cafeteria opportunity, and portfolio optimization.

The company may not be thrilling, but it’s not imploding. Unlike Tilray and Walgreens, Kraft has a functioning business with room for strategic improvement. At these valuations, it qualifies as a genuine bargain rather than a trap—offering patient investors reasonable downside protection and several paths to upside surprise.

The Low Book Value Lesson

These three low book value stocks reveal a hard truth: discount valuations exist for reasons. Sometimes the market gets it wrong. Often, it doesn’t. The distinction lies in whether the underlying business remains fundamentally sound or has entered structural decline. Tilray and Walgreens signal real problems. Kraft, despite challenges, retains the characteristics of a solid business hitting a rough patch—a crucial difference worth recognizing before deploying capital.