If earnings represent a company s take-home pay, book value is its net worth. Both measures can be turned into price ratios (price/earnings, price/book) and used to judge whether a stock is cheap or expensive.

Which is better? A 2000 study published in the Review of Quantitative Finance and Accounting compared them using data from 1973 to 1992 and found that P/E was a more accurate predictor of stock returns but that a combination of the two did better than either alone.

P/B could prove especially useful if stocks are due for another tumble. During severe market and economic downturns, earnings can shrink or even disappear, rendering price/earnings ratios misleading. Book values typically contract, too, but not as much.

The S&P 500 index, which tracks the broad U.S. stock market, trades at about double its underlying book value. At its March low, it was 1.5 times book. During a nasty recession from 1973 to 1975, the index was reduced all the way to its book value.

Bears will say that means stocks have yet to bottom out. Bulls might point out, rightly, that today s companies depend more on minds and less on machines to generate profits than their 1970s counterparts, so share prices should be higher relative to the book value of assets. Agnostics those who worry stocks are overpriced but who plan to stay invested may hedge by hunting for stocks with humble P/B and P/E ratios and decent dividends. Three such stocks are listed below.

Barnes & Noble

Americans are shopping less this year than last and have been gradually reading fewer books for years. Neither speaks well for Barnes & Noble, but its sales and profits are expected to increase in its current fiscal year, which ends in April, and its shares are up over the past year. On Wednesday, the company announced an electronic book reader that reviewers say compares favorably with Amazon Kindle. Don t expect the company to produce Amazon-like growth anytime soon, but its shares are one-third as expensive as Amazon s relative to earnings and one-tenth as expensive relative to book value.

Consolidated Edison

Consolidated Edison is a regulated seller of electricity, gas and steam in New York City and three nearby counties. In times of frantic stock-market trading, its shares are blessedly boring. Over the past two years, they ve bested the S&P 500 by nearly 20 percentage points while paying a dividend yield that s about twice as large. For fast earnings growth look elsewhere, but shares are cheaper than the broad stock market by a third, and electricity holds up better than most goods when consumers are loathe to spend.

Northrop Grumman

Defense contractor Northrop Grumman is a shipbuilder with a hand in bombers, electronics and computer networks. Its sales are expected to increase 3% this year and 4% next year. U.S. defense spending is perhaps ripe for cuts, considering its large share of overall government spending relative to peer nations, and growing public discontent with budget deficits. But the stock seems already priced for meager expectations, at just 30% over book value and 10 times earnings.