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Rupert Hargreaves
Rupert Hargreaves
Articles (1265)  | Author's Website |

5 More Deep-Value Stocks for 2020

More companies to consider for the new year that are trading at a discount to net-net working capital

Following my last discussion on five stocks Benjamin Graham might have liked, here are five more deep-value stocks for 2020 based on the dean of value investing's stock picking principles.

As a word of warning, I have not conducted any particularly detailed analysis on any of these companies other than selecting them based purely on financial metrics. This is only designed to be a starting point for further research, rather than a recommendation to buy these deep-value stocks.

Emerson Radio

The first company on my list is Emerson Radio Corp. (MSN). This $19 million market capitalization company reported cash and cash equivalents of $5 million in its last financial statement.

Emerson sources, imports and markets a range of houseware and consumer electronic products, as well as holding licenses for a range of products around the world.

Most of the company's value is tied up in short-term investments. It reported $29 million in short-term investments at the end of its last stated period and total liabilities of $3.5 million. The company has net working capital of $33 million, giving a market capitalization to net working capital ratio of 0.6.

Asia Pacific Wire & Cable

With a $19 million market cap, Asia Pacific Wire & Cable Corp. Ltd. (NASDAQ:APWC) offers more value based on its net working capital ratio.

According to its latest set of financial statements, the company has $49 million in cash and cash equivalents on the balance sheet as well as $95 million in net receivables and just under $100 million in inventory.

Deducting total liabilities of $82 million gives a net-net working capital figure of just under $88 million. On this basis, the stock is trading at a market capitalization to net-net working capital ratio of 0.21.

Asia Pacific is engaged in the manufacture and distribution of telecommunications and power cable through subsidiaries in Thailand, China, Singapore and Australia.

Sierra Oncology

Sierra Oncology Inc. (NASDAQ:SRRA) is clinical-stage biopharmaceutical company that has $68 million in cash on its balance sheet and $14 million in liabilities.

This gives it a net-net working capital of just over $54 million. A market capitalization of $18 million implies that the stock is trading at a market capitalization to net working capital ratio of 0.3.

A word of warning here. Sierra has burned through about $200 million in the past four years. As a result, there's a good chance the company could burn through all of its cash before it is able to produce any treatments.

Westell Technologies

Westell Technologies Inc. (NASDAQ:WSTL) is a provider of in-building wireless, intelligent site management, cell site optimization and outside plant solutions. For the past five years, the company has struggled to make a profit, but it has been at cash flow breakeven.

It latest set of financial statements show that the $14 million market cap company has net cash and equivalents of $22 million, receivables of $5 million, inventory of $8 million and net working capital of $22 million, giving a market cap to net working capital ratio of 0.7.

Oil & gas

Finally, PEDEVCO Corp. (PED). At the end of its most recent financial period, this natural gas business reported total assets of $120 million and liabilities of $13 million. Based on these figures, the $120 million market cap company is trading at a market cap to net working capital ratio of 0.66.

At the beginning of November, the company announced its production had increased nearly three-fold from 25,600 barrels of oil equivalent in third-quarter 2018 to 69,500 in third-quarter 2019. Revenues jumped from around $1.2 million per quarter to $3.1 million.

Disclosure: The author owns no stocks mentioned.

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About the author:

Rupert Hargreaves
Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.

Visit Rupert Hargreaves's Website


Rating: 4.3/5 (3 votes)

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Comments

fralom
Fralom premium member - 7 months ago

Thanks for sharing this. Would you also share the formula you use to get them? Do you have a bespoke screener or you use the GuruFocus Benjamin Graham Net-Net?

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