One way to play both sides of the QE2 puzzle is to buy a basket of stocks at a discount to net tangible book value. The idea here is that inflation could potentially lift the value of underlying assets, while the discount provides downside protection in case high inflation never materializes.
The following is a list of 20 stocks trading at a meaningful discount to tangible book value. Please note that this is only a list of ideas and that they require further investigation to determine the quality of assets (inventory, PP&E, real estate, etc.) and potential earnings power. Most of the names are small and micro cap stocks, have little or no net debt, and are profitable under "normal" conditions. Financial stocks are excluded, as they will be featured in a future article.
Basset Furniture (BSET)
Tandy Brands (TBAC)
A.C. Moore Arts & Crafts (ACMR)
Ascent Media (ASCMA)
Century Casinos (CNTY)
Lakes Entertainment (LACO)
Dynacq Healthcare (DYII)
Seahawk Drilling (HAWK)
Bronco Drilling (BRNC)
Union Drilling (UDRL)
Kimball Int'l (KBALB)
P.A.M. Transportation (PTSI)
Another idea I have shared previously is to own a portfolio of high quality, multinational companies that have pricing power, coupled with a very large cash position. This provides similar exposure to both ends of a wide range of possible outcomes.
Disclosure: No positions, but have previously recommended Bronco Drilling (BRNC).
Get additional value investing insight at IgnoreTheMarket.com.