Wandering in Deep Value Land

As many of you know Benjamin Graham had a famous style of investing that sought to purchase deep value stocks selling for large discounts to their net current asset value. It's also called the cigar butt approach. You find these cigar butts laying around and sometimes they are good for one last puff. There are different kinds of deep asset value stocks. There are the cheap for a good reason and then there are the cheap with good potential. The deep value companies in industries that typically turn into deep value traps are biotech and semi-conductors. So many of these have traded for huge discounts to net current assets and even had some profitability but the stocks never come around.
Some of the best net current asset stocks I've seen tend to be in businesses with simply better business fundamentals. A lot of these will even have a "brand moat" they can in-circle around their little castles while working to bring the company back from the gutter. An example of one of these former net current asset stocks that turned around was sports retailer Finish Line years back.
The first stock I am going to look at today is SkyPeople Fruit Juice (SPU). It is in China so I proceed with caution. SPU trades on the Nasdaq and has a market cap of $51 million. It is in net current asset deep value territory because the company has $66 million in net current asset value. I simply took the $200 million in current assets and subtracted the 36 million in total liabilities. So, we are at a discount to NCAV. I bring this one up because cash has been extremely stable.
The next one is Books a Million (BAMM). BAMM has a market cap of $36 million and net current asset value of $21 million. We are not in NCAV land yet but this is something to watch. The stock currently trades at $2.46 per share and NCAV is $1.4 a share. Net tangible asset value is $6.50 a share.
Disclosure: no position in SkyPeople Fruit Juice SPU or Books a Million BAMM at time of writing.

Two Net Current Asset Value Stocks

Lots of different things can become of net current asset value stocks. These are the truly deep value stocks that only a true value investor can love. Why? Because they aren't glamorous. They usually are not as sexy as say an Apple (AAPL) or GoPro (GPRO). Net Net's often don't even turn any profit. They are sometimes entering their journey into stock market obscurity.

However, sometimes they can be tremendous opportunities. Once in awhile a net net will be a former profitable growing company that just hit a rough patch. I find that many times these will have a "brand moat" like a major retailer. This can help the turnaround. Sometimes these good or great companies that turnaround and come out of net net territory can be big gainers and even multi-baggers. Yes, multi-baggers. Sometimes we value investors look for companies we that we know probably will never be good again. Companies that are just so cheap like trading below net cash that there might be a catalyst to bring out the value of the assets. Special situations and going private transactions can unlock that deep value. Or the company just recovers into profitability. One such company we will look at today that could possibly do so.

Delcath Systems (DCTH)
This troubled stock DCTH is seeing its stock price hammered lately. This is a struggling company. The reason I am interested in this one is the cash on the balance sheet. The cash has been stable. Let us crunch some numbers on this one. There is 25.1 million in net tangible assets or 2.64 per share, 22.7 million in net current asset value or 2.40 a share and 21 million in net cash which is 2.22 per share. The stock last traded at 1.77 a share. This is 20% below net cash. Technically this stock is taking out all kinds of support and I see it continuing to decline for awhile. Maybe we can see it around 40% below cash. That looks pretty good as cash stays stable.

SORL Auto Parts (SORL)
This is one of those that almost doesn't make any sense. This company has had sales and earnings growth and yet has been a net current asset stock. The last time I posted on SORL on the blog was last year. The stock ran up a lot and has started coming down again. Other than that not much has changed with this company. I can only guess the low price pegged on it is because it is a Chinese company. It's a small company too which is fine with me. The price to earnings growth rate (PEG) is nice here again at around 1.00. Last quarters earnings got shaved a little from forecasts. There is 129 million in net current asset value or 6.65 a share. The stock last traded at 3.48 per share or about half of its net current asset value. I think once SORL is below 3.00 a share it is in the buy zone. If you've read the blog over the past couple months or so you probably pinned me as just a technical analysis chart guy. Nope. I was a value investor before I learned how to read a chart. Why do I use both approaches? Simple. I like every edge I can get. I like to buy stocks that go up and short stocks that go down.

Coffee Holding JVA Stock Update A Net-Net

I've covered JVA on the blog for many years and shared my honest thoughts on the company. It's been so beaten down in this bear market it is now at .62% of net current asset value. In the past it would bottom out around net tangible asset value. This is one of those rarer cases where a profitable or recently former profitable company becomes a net current asset value stock.

If you are new to deep value the net current asset stocks get their attention because of famous investor Ben Graham who taught Warren Buffett. Net current asset value is a rought liquidation value of the whole company. Of course the true liquidatoin value is usually lower given the inventory and equipment and long-term assets are likely going to fetch less than on the books. They are usually priced so cheap for a reason too.

JVA is now merging with another company. Here is a piece of the SEC filing.

As a condition to the Merger, Pubco shall also acquire all of the issued and outstanding Delta securities from the Sellers in exchange for Pubco Ordinary Shares (the “Exchange” and, collectively with the Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”).

As a result of Transactions, JVA and Delta will each become direct, wholly-owned subsidiaries of Pubco, with JVA stockholders receiving approximately $31.5 million (or 4.79%) worth of Pubco Ordinary Shares (the “Merger Consideration”) and Delta stockholders receiving approximately $625 million (or 95.21%) worth of Pubco Ordinary Shares (the “Exchange Consideration” and collectively with the Merger Consideration, the “Business Combination Consideration”), subject to certain adjustments, at an implied diluted value per share of $5.50.

The Business Combination Consideration may be adjusted if Delta closes certain acquisitions prior to the closing of the Transactions. The Merger Agreement also includes an earn-out to existing stockholders of Delta, consisting of $50 million of additional Pubco Ordinary Shares, which will be released to Delta stockholders if and when Delta achieves $70 million or greater of net income for fiscal year ending 2023. The company they are merging with is private so I don't know anything about them.

Disclosure: I have a position in JVA

Two Interesting Deep Values

Here we go with the two deep values! I recently ran a screen looking for a particular kind of deep value stock. I was looking for either sub net tangible asset value or net current asset value. I screened out Chinese, semi’s, and biotech as these in my opinion tend to be less reliable as investments in the micro and small-cap space.

One of the more interesting I found was Crimson Wine Group, Ltd. (CWGL). I’ve rarely seen beverage companies below net tangible or NCAV before. A couple good ones that come to mind from years ago were Caribou Coffee and Coffee Holding when they were briefly below net tangible asset value. Caribou Coffee was bought by private equity after I wrote about it. I’ve never seen a wine company near deep value level.

Crimson Wine is currently trading for 59% of net tangible asset value. It is a wine wholesaler and direct to customer. From the most recent SEC EDGAR filings we have net tangible asset value of $221.4 million and market cap of just $133 million. Net current asset value is not far away at $72 million. They haven’t diluted with any recent offerings the past couple years as shares outstanding has been stable and slightly down. Cash has been stable on the balance sheet also. Cash is slightly up over the past couple years.

The company has had a slightly profitable quarter in the last year. The share price has been up and down. The stock had a good run from fall of 2020 to summer 2021 and has been down since. I always like to see a stock price that has had some kind of history of share price appreciation. So many small and micro-cap companies never have any history of stock appreciation so it is always nice to see the market can indeed react to positive performance. The company had positive free cash flow for the trailing 12 months ending Q3 last year of $8 million.

The second stock is Save Foods, Inc. (SVFD). It develops and sells eco-friendly green treatments for the food industry to enhance food safety and shelf life of fresh produce. This one is a small micro-cap with a market cap of $5.3 million. Net current asset value is $6.63 million. They grew revenue a whopping 88% from 2020 to 2021 although there is not an annual net profit in the last three years. Cash has been stable the last three years, however, shares outstanding has been diluted. From the second to third quarter of 2022 share count went from 2.8 million to 4.5 million.

If you liked this article subscribe here to my free Substack here where I cover deep value ideas.



Disclosure: I currently have no position in either of these stocks.

MSN and JVA Revisited

I quickly went through a net current asset stock screen. There is not much out there to no surprise. There are a few though that have potential. I've been blogging on them some. The SORL, the SPU. I've blogged about these two deep value stocks a lot in the past. First up is Emerson Radio (MSN)and it has always been around net current asset value and profitable. I took a look at Emerson again and this is what I see currently. I see cash on the balance sheet stable the past year. It is actually marginally up from last year. Cash is 28.1 million. There is zero long-term debt. Total liabilities are just 3.9 million. So net cash is roughly $24 million. The market capitalization of the company is $27 million. So it is right around net cash with the stock at 1.01 per share. I don't think it is any coincidence the stock has bottomed out and found support around 1.00 the past couple years. You can see that here in this chart below.

They squeaked out a small profit last quarter though revenue doesn't look good. Who knows what is to come. I am going to put a limit order to buy some shares around 1.11 or lower. If the price drops below .90 the thesis doesn't work anymore and I'll take the loss.

Coffee Holding JVA is very close to being a net current asset stock. It's been a net tangible asset value stock for awhile. The price has just been in free fall this year. It appears technically it could be bottoming. I hope it keeps dropping though. I see this as the best net current asset value if we get there. It almost got there in early October this year in the 3.80s. That was the bottom though and it got picked up on strong buy volume. This one really just needs an activist investor I think. Something like that. I don't know a whole lot about this company but wholesale coffee can be consistently profitable.

Net Current Asset Stock STLY

Stanley Furniture (STLY) is a well known brand in the furniture industry. With the stock just around a $1.00 a share it's below net current asset value or quick liquidation value. Because a lot of their assets are in furniture inventory this isn't a true "liquidation" value. The margin of safety would peg the stock much lower than net current assets. This is still a compelling net-net. It is a good one I believe if only because it is not a perennial one. Net current asset stocks that suddenly become this cheap that are retail with a good brand name often work out.

Net current assets are 19.2 mil. Market cap is 16 mil. I read the last quarterly and its just not being managed well. They have some apparently short-term supply chain issues. It's a decent net-net especially if they can turn it around any. Things are going poorly at the moment. They have cashed out life insurance policies to raise cash. This is as much a turnaround play as a value play. That's something to keep in mind.

Ben Graham Net-Net EFJI

EF Johnson Technologies EFJIMost of their business is from wireless radios. They sell wireless communications equipment with a large base of their customers being the government.

Major Customers
The U.S. Department of Defense was approximately 15%, 62% and 16% of consolidated revenues in 2008, 2007 and 2006. DRS Technologies, Sprint/Nextel, and the State of California are significant customers, representing 13%, 12% and 12%, respectively, of consolidated revenues in 2008.

Valuation
At $1.24 a share market cap is $32.74 mil and net current asset value is $39.41 mil. Net current asset valuation is a quick rough liquidation value. However, in this particular case almost 50% of NCAV (net current asset value) is comprised of inventory sitting in storage. In the event of an actual hypothetical liquidation it would very likely yield much less than the amount on the companies books.

2009 earnings per share have been boosted it appears to $.06 and a sole analyst expects $.10 for 2010. At 1.24 a share this is only about 12 times earnings and they could continue to grow over 50%. This asset valuation and trailing 2009 PE multiple of 20 seem nuts to me. Nuts meaning it might still be undervalued.

On the 15th of September volume soared and the stock flew on the back of a press release for their new Hybrid IP25 first responder radio system and 2 new military contracts for the radios on the 15th. I would have loved this stock at $1.00 because of the larger asset valuation cushion and also because of the price action. I believe the stock could have a pull-back soon which I explain in the following charts and I am going to wait a day or two to see what develops.



In the above chart we can see that there could be strong support right around $1.00.



The green line on ADX contracting worries me a little right now



It's running on heavy momo(momentum) right now being that it is hugging the upper band. Some people could take some profits soon.



The arrow on the right shows how buying volume is trending downward day to day which worries me that buyers might be getting exhausted in this round up for now atleast. Plus the doji candle two days ago and a shooting star candle Friday. The momo could very well continue for awhile but I feel more comfortable waiting just a day or two for either a pull-back or some other sign buyers are committed right now.


full disclosure: no position at time of writing

Net Net SORL

I recently looked through a lot of NCAV net-net's. These are stocks with market caps below net current assets. The most compelling recent net-net I noticed is a company called SORL Auto Parts.

SORL Auto Parts (SORL) is a Chinese company that develops, manufactures and distributes automotive brake systems and other key safety related auto parts to automotive original equipment manufacturers, and the related aftermarket both in China and aboard. The Company’s products are used in different types of commercial vehicles, such as trucks and buses. SORL is trading below net current asset value and is profitable. It even has earnings growth.

Crunching numbers straight from their annual 10-K filing the market cap is $51 million and net current assets are 124 million. At the current stock price of 2.65 it is trading 41% below net current asset value. Cash has also been stable over the past couple years which is good. Moving from the balance sheet to the income statement we find earnings and a current PE ratio of 4. The PEG ratio (price to estimated earnings growth) is incredibly nice at .89 over the next 5 years. In 2012 the company had free cash flow of around 29 million for the year.

The stock had a big run from 1.80 a share in Sept of last year all the way to 4.00 in February of this year.

My 2009 Net-Net Stocks Performance & Going Forward

I went back through the blog starting with the first day of 2009 and crunched some numbers on my net current asset stocks pick performance. This assumes one bought them the next day after finding them on the blog this year. If it was on the blog in 2009 and less than net current assets I used it. Looking through the 2009 list there are some that I posted on earlier than 2009 like HHGP which is a -20% loser since the initial post pre 2009,TUES +58% gainer and HKN -35% since its December post when it was less than tangible assets however. I think PARL was on the blog in 2007 or 2008 to but I didn't go back that far and a search didn't turn it up. It would be a looser from then. The rest were fresh for 2009.

This might sound a little weird but I think I've said this before. I really had no idea what I was doing with net-nets before around mid-2008. In 2007 when I started following them and most of 2008 I was just feeling them out. From mid 2008 on there are a lot of winners to though of course.

These returns below were calculated with the potential buy-in starting the day after it was on the blog in 2009 because I didn't always post during market hours. These returns assume one bought that next day and sold at the stocks high afterward. The likeliness of selling at the high is not highly likely but had one decided to protect the potential profits and sell on the way up it would have been very possible to have come out with a good chunk of the bulk of those profits. About all of these I calculated about 3 weeks ago so some of them are probably up a lot more since then. SMRT hit 10.50 for example. The ones with technicals next to them were ones that technical analysis had a major role in.

25 winners
4 losers

Winners
PIR 1,600% technicals

SMRT 670%

SWIR 285%

TUES 236%

PXG 293% technicals

MSON 178% technicals

VVTV 194%

HHGP 156%

CACH 150%

AERG 100% in 1 day technicals

ANAD 96% technicals

GSIG 77% technicals

NLS 58% technicals

MLR 48%

CALL 45%

PARL 42%

HURC 40%

FSII 40% technicals

LDIS 28% technicals

JOB 26%

AEY 17%

SPAR 20% technicals

IFON 19% technicals

HKN 18%

IVA good run .50 to .70 but I think was to illiquid

NSTR .05%

Losers
CDCO -5%

ADGF -19%

RFIL -25%

QLTI -53%

SKX -46% stock crashed after post. Maybe a little to hard on this one because if doubled down off March lows it went to 14 as of now.


I'm going to start tracking the performance of my net current asset stock aka net-net picks better from here out. For it to be a pick I'll do a post on it and say it is a buy at such and such price. I'll also add it to this portfolio here. I'm pretty sure this can be viewed by anyone. I may also add none net-nets from time to time. I'm not liking Tickerspy so far because I haven't figured out how to even sell a position with it. I started a Marketocracy portfolio to which I think I like better but the $1 mil it gives me to manage is a bit much to just show how I can trade these net's.

If you've been paying attention to my net-net posts, for months now I have only been putting a net-net up if it is worthy of an actual buy very soon me. Since 2007 I have put up a lot of net-net's as potentials with my thesis on them but didn't always pound the table on them as a buy that day. I'd usually run through the good I saw and the bad. I was good then but I am even better now.

From here out my skill with stock picking will be a little more on display be it turn out good or bad. Some time in the future I may switch it over to Covestor.com. Covestor actually taps into your broker so with them there is the most complete transparency possible. For now though I feel like posting on them around the same day I trade them will do. I put up FSII ahead of time because that set-up was so good I wanted put out a heads up. I think the bulk of you that read my blog are here for net-net's and value plays. It's not always easy for me to post up an entry for a net-net trade in real-time on the same day so I might just do these watches. I don't keep as close an eye on net-net's and deep value day to day as I do my other watchlists. I trade a lot of different strategies.

I brought up earlier that I want to start charging a yearly or monthly subscription for my net-net picks. If I go that route it will still be months off. You will also have the opportunity to track my progress better before deciding if $5-$8 a month is worth it. As you can see since 2008 it has been going well and I've actually even stepped up my proficiency lately.

I've only been following net-net's since 2007 and have made really big progress since just 2008 in them. I have kind of gotten in a groove on which ones to drill down on with the fundamental analysis and focus on. Incorporating technical analysis as a tool in my various strategies has also been very significant. I am a very different investor and trader with net-net's and approach them differently than most investors who work in them. I believe that has really helped me identify some of the best performers better.

full disclosure: no positions

My 2009 Net-Net Stocks Performance & Going Forward

I went back through the blog starting with the first day of 2009 and crunched some numbers on my net current asset stocks pick performance. This assumes one bought them the next day after finding them on the blog this year. If it was on the blog in 2009 and less than net current assets I used it. Looking through the 2009 list there are some that I posted on earlier than 2009 like HHGP which is a -20% loser since the initial post pre 2009,TUES +58% gainer and HKN -35% since its December post when it was less than tangible assets however. I think PARL was on the blog in 2007 or 2008 to but I didn't go back that far and a search didn't turn it up. It would be a looser from then. The rest were fresh for 2009.

This might sound a little weird but I think I've said this before. I really had no idea what I was doing with net-nets before around mid-2008. In 2007 when I started following them and most of 2008 I was just feeling them out. From mid 2008 on there are a lot of winners to though of course.

These returns below were calculated with the potential buy-in starting the day after it was on the blog in 2009 because I didn't always post during market hours. These returns assume one bought that next day and sold at the stocks high afterward. The likeliness of selling at the high is not highly likely but had one decided to protect the potential profits and sell on the way up it would have been very possible to have come out with a good chunk of the bulk of those profits. About all of these I calculated about 3 weeks ago so some of them are probably up a lot more since then. SMRT hit 10.50 for example. The ones with technicals next to them were ones that technical analysis had a major role in.

25 winners
4 losers

Winners
PIR 1,600% technicals

SMRT 670%

SWIR 285%

TUES 236%

PXG 293% technicals

MSON 178% technicals

VVTV 194%

HHGP 156%

CACH 150%

AERG 100% in 1 day technicals

ANAD 96% technicals

GSIG 77% technicals

NLS 58% technicals

MLR 48%

CALL 45%

PARL 42%

HURC 40%

FSII 40% technicals

LDIS 28% technicals

JOB 26%

AEY 17%

SPAR 20% technicals

IFON 19% technicals

HKN 18%

IVA good run .50 to .70 but I think was to illiquid

NSTR .05%

Losers
CDCO -5%

ADGF -19%

RFIL -25%

QLTI -53%

SKX -46% stock crashed after post. Maybe a little to hard on this one because if doubled down off March lows it went to 14 as of now.


I'm going to start tracking the performance of my net current asset stock aka net-net picks better from here out. For it to be a pick I'll do a post on it and say it is a buy at such and such price. I'll also add it to this portfolio here. I'm pretty sure this can be viewed by anyone. I may also add none net-nets from time to time. I'm not liking Tickerspy so far because I haven't figured out how to even sell a position with it. I started a Marketocracy portfolio to which I think I like better but the $1 mil it gives me to manage is a bit much to just show how I can trade these net's.

If you've been paying attention to my net-net posts, for months now I have only been putting a net-net up if it is worthy of an actual buy very soon me. Since 2007 I have put up a lot of net-net's as potentials with my thesis on them but didn't always pound the table on them as a buy that day. I'd usually run through the good I saw and the bad. I was good then but I am even better now.

From here out my skill with stock picking will be a little more on display be it turn out good or bad. Some time in the future I may switch it over to Covestor.com. Covestor actually taps into your broker so with them there is the most complete transparency possible. For now though I feel like posting on them around the same day I trade them will do. I put up FSII ahead of time because that set-up was so good I wanted put out a heads up. I think the bulk of you that read my blog are here for net-net's and value plays. It's not always easy for me to post up an entry for a net-net trade in real-time on the same day so I might just do these watches. I don't keep as close an eye on net-net's and deep value day to day as I do my other watchlists. I trade a lot of different strategies.

I brought up earlier that I want to start charging a yearly or monthly subscription for my net-net picks. If I go that route it will still be months off. You will also have the opportunity to track my progress better before deciding if $5-$8 a month is worth it. As you can see since 2008 it has been going well and I've actually even stepped up my proficiency lately.

I've only been following net-net's since 2007 and have made really big progress since just 2008 in them. I have kind of gotten in a groove on which ones to drill down on with the fundamental analysis and focus on. Incorporating technical analysis as a tool in my various strategies has also been very significant. I am a very different investor and trader with net-net's and approach them differently than most investors who work in them. I believe that has really helped me identify some of the best performers better.

full disclosure: no positions

Net Net SORL Is Cheap

I've made a couple posts on SORL Auto Parts over the past couple of years. Nothing has changed much with the companies long-term fundamentals. The only thing that has changed significantly is the stock price. It's net current asset value has actually increased from 2013 when it was $124 million and 2014's of $129 million. Right now $141.7 is the net current asset value of SORL. It still sells brakes and auto parts in China. It's a major player in commercial brakes. What I didn't realize about SORL before is how diversified it is internationally. 73% of its business is in China but 27% is international in 104 countries including the United States, UAE and Europe. I'm always skeptical of Chinese companies so I looked around to see if I could find info on where they are sold in the US. I didn't see anything which likely is because they are sold directly wholesale to big companies with commercial trucks. I did find some parts on Alibaba.

The stock is cheaper relative to NCAV than in 2013 with the market cap back at $50 million, NCAV at $141 million and the stock at 2.72. It is priced at 36% of net current asset value. I do believe this would even meet Benjamin Graham's margin of safety requirement! Sales have grown steadily every year since atleast as far back as 2012. Yet the current price to sales multiple is .23. Below 1 is low for about any decent company. The company is profitable yet the PE ratio is 3. On the balance sheet the current ratio is 3.6. Healthy. A cool $18 million in free cash flow in 2014.

I'm very bullish on China over the long-term and I would expect this correction currently going on in the overall China market to end sooner than later. The current PE multiple on the stocks in FXI is around 10-11. If you can get major Chinese companies for single digit PE's that is cheap. Not to mention some dividend yield too. SORL has a lot of support until 2.50. I think the fundamentals make it a compelling buy here.

The Best Net Net Stocks?

I looked through a lot of net-net's lately and didn't find all that much. On Zacks.com I screened for ones with zero long term debt. That diminished the universe of them along with ignoring all Chinese ADR's. So far this company called The LGL Group ticker LGL founded in the year 1917 seemed the most intriguing. Mostly because the company and stock price has not always struggled. The stock preformed very well in 2010.The company has $9.9 million in net current asset value and a market cap of just $8 mil. $5.4 mil of the net current asset value is cash. The company is not profitable. The last year of profitability was 2011. I put it sort of in the category of Emerson Radio MSN a perennial net because they are both electronics companies. MSN by the way is now selling for less than half of its net current asset value and is profitable.

Net Current Asset Stocks and Positon Updates

I plan on going through some net current asset stocks over the next few days as I will have some time off. I plan on using the trusty Graham Investor Site and a basic site like either MSN or Yahoo and just screening for great balance sheet strength with light total liabilities to find some stocks net cash and net current assets. I'll post up any interesting finds later this week. Off of the top of my head I had expected Delia's DLIA to be a successful net-net because of the strong brand and potential they had for a turnaround. I mean they are practically in every mall in America. I see this stock is now a sub penny stock trading below $.01 a share. Luckily I had forgotten about it for some time and never took a position.

The net-net Delcath Systems DCTH I posted on recently where I said I wanted to see it even cheaper to its net cash did indeed fall. When I say net cash that is essentially selling for less than the cash on its balance sheet minus all debt. The stock fell as low as $1.09 and has gone as high as $1.50s. I may have missed it as I didn't pull the trigger but this looks like a flag and it could very well drop even lower. I prefer to scale into positions so if I pick up shares around $1 they might just be half of the position.

My long term portfolio is mixed lately.  The Fidelity Emerging Asia Mutual Fund is underperforming the US Markets, however my dollar long position via the ETF UUP which I posted my buy of dollar ETF UUP on Twitter is finally coming around and breaking out again. My Pimco bond fund is  basically flat.

The major US indices look very healthy here and it looks like we are heading for new highs any day here. Even the Russell 2000 looks like it will break out here very soon. The Russell has been the laggard. It's often seen as a key index to the overall market. I may do a post soon on it as it looks like there is a failed signal on the chart forming. Failed signals can often be extremely important. Jack Schwager wrote about them in his books.

Looking at Net-Net BAMM and Short Watch GNIN

Net-Net BAMM I am currently looking for some net-net's and deep asset value worth writing about. After spending some time going through a stock screen I found Books a Million (BAMM) to be one of the most compelling net current asset stocks I saw for the time being. In looking in the stock market sewers for deep value stocks one can often find somewhat of a diamond like Silver Leaf Resorts SLVF or Adams Golf ADGF were. I'm not sure if BAMM is a diamond but it is something to look at if the stock price gets a lot cheaper. So I think it is something to just watch as the price here at $2.40 is just below net current asset value.

Short Watch Green Innovations (GNIN) Green Innovations (GNIN) traded over $7 million shares Friday and is currently going full zombie. It's up from $1.00 to $2.75 just this month. It's been running everyday and buying volume is eventually going to get exhausted. It's been volatile on the way up so it will be volatile on the way down. To short a momo stock like this it's a bad idea to short when it is green (positive) on the day. It needs to crack the previous days close before it is a short setup. The setup is going to be here very soon. Could even be Monday or Tuesday.

What I Use for Stock Screens and a Trading Watchlist

Everyday after the market has closed I try to run though atleast 80 to 100 charts with my custom scans on Stockfetcher.com. I just use pure technical and statistical screens. I don't screen any fundamentals on Stockfetcher. For fundamentals these days I just us Graham Investor and look at NCAV stocks.

A perfect scenario when I'm scanning is to find a good looking chart first on Stockfetcher that also is a net current asset stock or deep value around net tangible assets. There continues to be a lot of stocks moving in the alternative energy industry. I've had Plug Power PLUG keep popping up in scans but I missed the last big run. I'm still watching it though. Fuel Cell FCEL has a good chart going too. If I were going to be daytrading tomorrow I would have ETRM on watch with a long bias. This is a very clean flag right here.

For possible position trades

I really like Vapor Corp VPCO. They sell electronic cigarettes. Electronic cigs are a winning industry of the future. It looks poised to breakout here again.

Delcath Systems DCTH is hovering right around net current asset value. On the balance sheet there was about $25 million in net current assets. The market cap is right around there here at $.24 a share. It's in breakdown mode so more lows look like they are coming.

Star Scientific STSI has had some bad news lately. I see it as a contrarian play in the low $1 a share area. This stock in the 10 years I pulled up price history in yahoo has always bottomed around $1 a share.

Old Net-Net Blonder Tongue BDR On The Move

Former net-net Blonder Tongue Labs (BDR) has 5.5 mil in net current asset value and a market cap of 9.6 million. It has always been one of those perennial net-nets. Always below and around net current asset value. Unfortunately I wasn't watching it lately. It has bottomed out as this chart shows. I circled the failed breakdown. The stock then was in breakdown mode until the lower low turned into a spike bottom. Confirmation of the failed breakdown is where I drew the arrow. Failed signals can be very powerful. The second chart is the beautiful flag it printed. The chart is real bullish here still even though I missed the perfect setups and price. I'm long biased on BDR.

Net Current Asset Stocks

As the market continues to be weak I am going to start looking for cheap stocks below net current asset value and net tangible asset value. I just ran a strict scan looking for super discounted assets. This is the first scan I have done in awhile for these as I never thought it would produce much in the most recent bull market. This scan is cherry picked from criteria of price-to-book value of .5 or less, long-term debt to equity less than .3 and return on equity over 1.

The most interesting ones are Vaccitech plc (VACC) with NCAV of $187 million and a market cap of $89 mil. VACC has postive earnings this year with $.22 last quarter and $.42 the quarter before that. Cash has been pretty stable the past year and currently it has $200 mil in cash.

We also have TD Holdings, Inc. (GLG) with $154 mil in NCAV and a market cap of $59 mil. Not as much cash as VACC as the large majority of the current assets are in account receivables. They had a couple recent slightly positive quarters of $.02 earnings per share and $.05. The stock has tried to bottom and has been sideways for months with support around $1.00 a share.

Deep Value Stock Blonder Tongue BDR

You guys remember the value stock Blonder Tongue (BDR) ? It's usually been around net tangible asset value over the years. It will run up a bit one year then come back to around net tangibles. Well the stock has recently just crashed. It plummeted from over $2.00 a share to just $.77 a share. I went through the press releases on Yahoo! from the 30th and 31st on the day it crashed and couldn't find a good cause of the crash. They released quarterly results which were not to bad, not to good. I don't get it. There may be no good reason though of course and the stock is just crazy cheap for no reason. Here are the old posts on BDR. Looking back at all my notes on the stock $1.00 has been the floor for many years. At the last print it traded at $.90 Monday. This puts it at a market cap of roughly $5 million. Net current asset value is just above $5 million also. We are near net current asset value territory. I really like the stock here below $1 and might take a small position in it.

Health Care Bill Stocks Breakout Play

Near Net Current Asset Stock & health care stock Forward Industries FORD products include soft-sided carrying cases, bags, clips, hand straps, protective face plates, and other accessories for medical monitoring and diagnostic kits, cellular telephones, and bar code scanners. I read in the annual report that diabetic products were 75% of sales in 2009. With more people now being covered by the government all these people who are or are about to get type II diabetes should add to that segment.

I believe the market cap was just over NCAV. Net current asset value is $22.2 million and current market cap is around $22.5 million. The stock is volatile though and was up 19% Friday so it could actually dip below. They have a great balance sheet. The bulk of quick assets are in cash. I am sure there are a lot of other health care reform stocks out there as well that will benefit from the government subsidies if you will. This is just one that caught my eye because of the huge volume last week. MDF is an interesting chart too.




The stock is in a clear uptrend and seems to be possibly a failed double top on this wide ranging day spike. The only concerning thing is how much of an appetite is left after this run but being around NCAV seems positive in this regard. Hard for me to pick a spot technically to enter because the stocks momentum looks strong here. I might play it of continuation or a pull-back to new support at around 2.60. It's actually a better investment and hold type of play probably on health-care. Luckily one of the few long-term investments I still have is a healthcare mutual fund that I've held for some years. I sold my Stryker SYK about a couple years ago.

full disclosure: no position at time of writing

Deep Value Stock PRLS

I find Peerless Systems (PRLS) to be one the more compelling net current asset stocks I currently know of. The company has a market cap of $10.1 million. There is $4.58 per share in net current asset value and $1.77 in net cash per share. The stock last traded at $3.35 per share. They've repurchased a lot stock over the past couple years. The company has bought in aggregate 482,111 shares of stock or $1.8 million in fiscal 2013. Additionally, from February 1st of this year to April 23, 2013 they repurchased $230,652 of stock.