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.
The US stock market keeps ripping higher with mediocre global economic data at best. Company revenues and earnings locally here in the US aren't stellar either. Take for instance Caterpillar (CAT). The company reported quarterly earnings yesterday that were abysmal. The company is still practically in a death spiral. And they may be one of the best indicators of future growth. The stock has been in a strong downtrend but surged higher on heavy trading volume the day of the earnings announcement. It even followed through more today!
Just looking at the major indices the steady climb higher reminds me of the surge off of the 2009 lows. It looks like the aftermath bottom following the 2010 flash crash and the mini flash crash of last fall. What did all of those have in common? One thing. High frequency trading (HFT) or program trading. Here is a video from the summer of 2009 where an institutional trader talks about HFT. He said it just overwhelmed the tape and no one can fight it.
Many stocks were driven higher with uncanny price action. One that comes to my mind in particular from 2009 is Beazer Homes (BZH). If you are familiar with "truly" manipulated penny stocks aka pump and dumps this chart will ring a bell. This is BZH in 2009. See how it goes up day after day without consolidating? And any red days are met with a continuation of the uptrend. Then it soars at the end and crashes.
Here is the current S&P 500 index in its sharp uptrend
They say officially that 50-60% of the volume on the exchanges are high frequency trading. I've always been skeptical and assume its closer to 70 or 80% or more. I don't personally have any problem with HFT.
I think we are seeing a high frequency trading bottom being put in here on the major indices. When we are going higher everyday don't fight it. I wouldn't be surprised if this keeps up for weeks. It smells like QE is here or is coming.
