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May Ben Graham Net-Net Pick: A profitable company selling for less than net cash

May 04, 2014
GuruFocus

GuruFocus

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May Ben Graham Net-Net pick is simply too cheap, it’s trading for less than net cash. Their operations are profitable and cash flow generative.

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The Ben Graham: Net-Net Newsletter’s May’s pick is company that owns a cleaning supply retail chain. The company:

  • Sells for 55% of NCAV, and for less than net cash and investments.
  • Their operations have been cash flow generative nearly doubling their cash over the past seven years.
  • Management has been conservative regarding cash use.
  • The company is owned by a majority shareholder and run by the founder’s grandson

Company management is shareholder friendly.

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, download your copy of the Ben Graham: Net-Net Newsletter today


Rating: 3.0/5 (2 votes)

Voters:

Comments

Dr. Paul Price
Dr. Paul Price premium member - 6 months ago

Publishing recommendations on penny stocks (this month's pick is listed @ $0.20 per share) is not a good practice.

The bid-ask spread this morning May 5, 2014 is 25% apart @ $0.20 - $0.25. How will the author measure the portfolio performance? I would hope by using the ask, so as not to exaggerate his return.

Please leave your comment:


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