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Avoid These High-Risk Net Cash Stocks: PLBC, INTL, VISN

November 08, 2012 | About:
This is a follow-up article to my previous article "Avoid Net Cash Stocks with These Warning Signs," where I discussed the warning signs at net cash stocks.

High-Risk Net Cash Stocks

Sixty-two net cash stocks listed on the NYSE and Nasdaq were filtered based on the following criteria using closing stock prices as at Nov. 6, 2012, to identify high-risk net cash stocks.

- No dividends paid for the most recent financial year

- Gross debt/equity greater than 30%

- Increased debt or equity financing for the most recent one to two years

The following stocks met the criteria for high risk net cash stocks:

Plumas Bancorp (PLBC)

Plumas Bancorp is a bank holding company. The company’s principal subsidiary is the Plumas Bank (the Bank). As of December 31, 2010, the company’s other subsidiaries were Plumas Statutory Trust I and Plumas Statutory Trust II. The Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation (the FDIC). The Bank, through its 11 branch network, serves the seven contiguous counties of Plumas, Nevada, Sierra, Placer, Lassen, Modoc and Shasta. As of Dec. 31, 2011, the Bank maintained 15 automated teller machines (ATMs) tied in with statewide and national networks. Its retail lending services include consumer automobile and home equity loans. Its principal commercial lending services include term real estate, commercial and industrial term loans. In addition, it provides government-guaranteed and agricultural loans, as well as credit lines. It provides land development and construction loans on a limited basis.

- Cash as a percent of market capitalization = 109%

- Gross debt/equity = 34.6%

- Current debt at approximately US$14 million is 36% higher than debt of US$10 million as at end fiscal year 2010.

INTL FCStone Inc. (INTL)

INTL FCStone Inc. (INTL), along with its subsidiaries, provides risk management consulting services to mid-sized commercial customers, as well as provides foreign exchange and treasury services, securities execution, physical commodities trading services and execution in both listed futures and option contracts, as well as structured over-the counter products in a range of commodities. It provides these services to a range of more than 20,000 customers located in more than 100 countries, including producers, processors and end-users of physical commodities; to governmental and non-governmental organizations, and to commercial banks, brokers and investment banks. In August 2011, the company acquired Ambrian Commodities Limited. In October 2011, it announced that its investment banking unit, INTL Provident Group USA, sold HKR Co. Ltd. to Headland Capital Partners. In November 2011, it acquired Coffee Network Division of Hencorp Futures.

- Cash as a percent of market capitalization = 172%

- Gross debt/equity = 56.3%

- Current debt at approximately US$175 million is 127% higher than debt of US$77 million as at end fiscal year 2011.

VisionChina Media Inc. (VISN)

VisionChina Media Inc. (VisionChina) operates out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China based on the number of displays. VisionChina’s mobile digital television advertising network or its network delivers real-time content provided by the local television stations in addition to advertising. Its advertising network consists of digital television displays located on buses and in subway trains and subway platforms that receive mobile digital television broadcasts of real-time content and advertising. The company also operates various closed-circuit advertising digital displays in certain subway platforms and subway trains in Beijing, Chongqing, Guangzhou, Nanjing, Shenzhen and Tianjin. As of Dec. 31, 2011, its network and supplemental subway advertising platform covered 20 cities in China and consisted of approximately 137,423 digital displays.

- Cash as a percent of market capitalization = 185%

- Gross debt/equity = 49.3%

- Current debt at approximately US$35 million is 71% higher than debt of US$24 million as at end fiscal year 2011.

- Shares outstanding increased by 23% from 82 million shares as at fiscal year 2010 to 101 million shares now.

About the author:

Mark Lin
Mark is a private value investor and runs the Cheapskate Investing website which borrows from the wisdom of value investing giants, using a systematic quantitative screening approach to filter the global stock markets for cheap deep-value cigar-butts and wide-moat compounders. He is also a regular contributor to various value investing communities.

Visit Mark Lin's Website


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