In a rising stock market, all eyes are on the income statement. 

#-ad_banner-#But in a flat or falling market, the balance sheet moves into the spotlight. Investors want to know that their stocks that possess certifiable take-it-to-the-bank value. The recent drubbing among tech and biotech stocks brought this issue right to the fore. Many of these stocks traded for 10 or even 20 times tangible book value and had no floor in place when investors began to head for the exits.

As Warren Buffett’s gurus, Benjamin Graham and David Dodd, explained eight decades ago, you can sleep well at night only if you own stocks that are valued at a lower price than the net assets on the balance sheet — what’s known as “below book.”

Back in Graham and Dodd’s era, you could find many stocks sporting such value. These days, less than 10% of all U.S. stocks with a market value of at least $200 million trade below book. And the pool of stocks that trade at a very deep discount to book value is even smaller. A quick review of such stocks suggests that a few industries are especially cheap in relation to their hard assets.

Consider the gold and silver miners as an example. Ten of these companies trade for less than 85% of tangible book value.

Why are they so cheap? 

Because the current slump in gold and silver prices has led investors to question the value of their hard assets. Mines acquired a few years ago at the peak of the precious metals bubble are likely worth less today. And industry profits are subpar at the moment. 

Gold and silver miner Coeur Mining (NYSE: CDE) typifies this industry’s woes. In the first quarter of 2014, it generated around 25% less income for each ounce of gold and silver it sold than it did a year ago. As a result, $13 million in positive cash flow a year ago dwindled to a $10 million operating cash outflow in the most recent quarter.  And investors have responded by pushing this stock far below the net value of its assets.

If mining stocks hold little appeal to you right now, you can find below-book stocks in other sectors.  

Another fertile area for such deep value plays is in the insurance industry. Not only do these companies possess solid balance sheets, but their cash holdings will yield ever greater returns as interest rates rise.

My colleague Adam Fischbaum recently noted an intriguing group of insurers on his buy list. Not interested in miners or insurers? Well, there are other below-book value stocks hidden in various pockets of the market. 

For example, check out TravelCenters of America (NYSE: TA), which, remarkably, is valued at just 81% of tangible book value, even after surging 73% since I profiled the truck stop operator in late 2011. (Royal Caribbean Cruises (NYSE: RCL), which was also profiled in that piece, is up an even more impressive 123% in that time.)  

It’s worth noting that TA is expected to earn $1 a share next year, which means that it is valued at only 7.5 times projected profits. And tangible book value is likely to expand by $1 a share, all other things being equal. 

I came across a few dozen other below-book stocks. Here are 10 that hold great appeal:

A few notes about these stocks:

• Swift Energy (NYSE: SFY) has seen a considerable amount of insider buying over the past few quarters. 

• Lukoil (OTC: LUKOY) is a current favorite of contrarian investor Steven Romick.

• Citigroup (NYSE: C) is the only major bank stock trading at such a deep discount to book value, and many investors are ignoring the fact that book value is growing at a rapid pace. 

• Aircastle (NYSE: AYR) not only owns an undervalued collection of for-lease airplanes, but also sports a 4.7% dividend yield.

• Investors can snap up an even juicier 7.6% dividend yield by buying college housing real estate investment trust (REIT) Campus Crest Communities (NYSE: CCG), which I profiled a year ago.

Risks to Consider: These below-book stocks lack catalysts, and it may take a few years to claw their way back to book value.

Action to Take –> In addition to the upside these stocks offer, consider their impressive downside protection. In a falling market, investors can squarely focus on their hard assets. Every one of these companies should be using their balance sheet to their advantage. Share buybacks, for example, are a no-brainer move. 

P.S. Our top commodities analyst just returned from a trip to Asia with some shocking news. According to his contacts, China has been quietly involved in a “spending spree” that’s about to hit American shores in a big way… And these two stocks could gain 145% and 218%. For a free report on this situation, click here now.