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April Ben Graham Net-Net Pick: 80% of the Market Cap is Cash

April 07, 2013

The Ben Graham: Net-Net Newsletter’s April’s pick is a technology company in the medical device industry that has weathered many storms and remained profitable. The thesis is simple, 80% of the market cap is cash, and an EV/EBIT of 0.82. Earnings and book value have been growing, a hidden gem for sure.

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This month’s pick:

· The company trades at 80% of NCAV and 68% of book value.

· The company has a P/E of 5.75

· Cash rich, cash equals 80% of the company’s market capitalization.

· Looking past excess cash the company is extremely cheap with an EV/EBIT multiple of .82x.

· Profitable during the financial crisis even with a significant drop off in revenue in 2010.

· The company has shown their agility by changing their market strategy successful in response to industry challenges.

Download your copy of the Ben Graham: Net-Net Newsletter today

“It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of stocks at a price less than the applicable net current assets alone...the results should be quite satisfactory. They were so, in our experience, for more than 30 years.”- Ben Graham

What’s a Net-Net?

A net current asset value bargain—or net-net—is a stock selling for less than the value of its current assets—cash, receivables, and inventory—minus all liabilities. Basically, it’s a stock selling for less than its liquidation value.

What’s the Ben Graham: Net-Net Newsletter?

GuruFocus’s Ben Graham: Net-Net Newsletter is written by Nate Tobik. It picks one new net-net every month. The newsletter goes out to subscribers on the first Friday of the month. The newsletter looks for stocks that have both a tangible margin of safety and reasonable upside potential.

So, get your copy of the Ben Graham: Net-Net Newsletter today.

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