There are some investors who buy U.S.-listed stocks that are trading below their liquidation values because they believe they can gain a lot from these stocks after the market has reappraised the share prices to near or above the liquidation value.
Should the company have financial problems leading to insolvency, these shareholders would, in theory, still be able to benefit from the distribution of the liquidation value, which will most likely be higher than the purchasing price. The liquidation value of these so-called net current asset value stocks is calculated as "current assets minus total liabilities."
Thus, short-term investors could be interested in the two companies listed below, as their stock prices are trading below their net current asset value per share (NCAVPS).
Acutus Medical Inc.
The first stock to consider is Acutus Medical Inc. (AFIB, Financial), a Carlsbad, California-based designer and manufacturer of electrophysiology products for the treatment of various arrhythmias in the United States and internationally.
The stock was trading at a price of $3.11 per share at close on Tuesday, which stands below the net current asset value per share of $3.29 as of the September 2021 quarter.
Following an 89% drop that happened over the past year, the stock now has a market capitalization of $87.77 million and a 52-week range of $2.92 to $30.18.
The company continues to see a continued improvement in the sales volume of its disposable products and procedures, especially in the U.S. market, where most of the demand for Acutus items comes from.
Third-quarter sales were $4.6 million, up 43.8% year over year. Net income is expected to turn into profit as Acutus' sales volumes increase. For the last quarter of 2021, analysts forecast total revenues of $3.99 million (up 55% year over year). Revenues for the first quarter of 2022 are predicted to be $4.9 million (up 36. 5% year over year). For full-year 2021, analysts are expecting revenue of $16.91 million (up 99.8% year over year).
ORBIMED ADVISORS LLC and DEERFIELD MANAGEMENT COMPANY, L.P. (SERIES C) lead the group of the company's top fund holders, both with 9.48% of shares outstanding. Capital World Investors is in third place with 5.73%.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $8 per share.
Cango Inc.
The second stock short-term investors could be interested in is Cango Inc. (CANG, Financial), a Shanghai, People's Republic of China-based service company that engages car buyers through a nationwide dealer network, facilitating car financing, car trading transactions and aftermarket services.
The stock was trading at a price of $3.46 per share at close on Tuesday, standing below the net current asset value per share of $7.65 as of the September 2021 quarter.
Following a 52.35% decrease that occurred over the past year, the stock now has a market capitalization of $541.48 million and a 52-week range of $2.60 to $19.60.
The continued growth and development of the Chinese automotive and mobility market are supported by strong demand for new energy vehicles (NEVs). Reflecting a 169% year-over-year increase, nearly 3 million NEVs were sold in China last year, according to the China Passenger Car Association. While some of the government's financial incentives for green vehicle purchases are ending, it should have little impact on NEV sales volume in the coming quarters as there is a huge backlog of sales orders that have not yet been delivered to customers.
It appears that the company can capitalize on these prospects for the Chinese auto industry as it continues to expect higher revenues. Cango expects fourth-quarter 2021 revenue to reflect sequential growth of 18.5% to 25%, up from $124.3 million in the previous quarter. In the third quarter, revenues grew 84% year-over-year thanks to the increase in financing and auto trading transactions that the company enabled through its platform. Shareholders hope that higher sales will soon translate into a positive bottom line.
Warburg Pincus LLC and Primavera Capital Management Ltd are the leaders amid the company's top fund holders with 18.30% and 3.53%, respectively, of shares outstanding.
On Wall Street, the stock has one recommendation rating of hold and a target price of approximately $4.80 per share.
