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Alberto Abaterusso
Alberto Abaterusso
Articles (2321) 

A Trio of Net Net Working Capital Stocks to Consider

The short term investor may be interested in these three companies

September 25, 2020 | About:

There are some investors who acquire stocks when their share prices are trading below their liquidation value. This investment strategy is based on the belief that it would not take a long time before Mr. Market reappraises the share prices up to a value near or above the liquidation value, yielding significant capital gains. Furthermore, shareholders will, in theory, still be able to earn a profit from the liquidation should the business go bankrupt.

The liquidation value of these so-called net-net working capital stocks is computed as "cash and short-term investments plus 75% of accounts receivable plus 50% of inventory, minus total liabilities."

Below are three stocks whose share prices are trading below their net-net working capital.

Deswell Industries Inc

The first stock short-term investors may want to consider is Deswell Industries Inc (NASDAQ:DSWL), a Chinese manufacturer and seller of plastic and metallic molds and parts as well as electronic components to original equipment manufacturers.

The stock was trading at a price of $2.54 per share at close on Thursday, standing 3% below the net-net working capital of $2.61.

GuruFocus assigned a score of 9 out of 10 to the company's financial strength rating and a score of 4 out of 10 to its profitability rating.

Following a 3% decline over the past year, the stock has a market capitalization of $40.44 million and a 52-week range of $2.02 to $3.09.

The company's top fund holder is Morgan Stanley with 1.99% of shares outstanding. It is followed by InterOcean Capital, LLC with 0.49% and RBF Capital, LLC with 0.19% of shares outstanding.

One analyst on Wall Street issued a hold recommendation rating for this stock with a target price of $7.75 per share.

Jupai Holdings Ltd

The second stock short-term investors may want to consider is Jupai Holdings Ltd (NYSE:JP), a Chinese asset management company.

The stock was trading at a price of $1.71 per share at close on Thursday, which is 5.5% below the net-net working capital of $1.81.

The company holds a GuruFocus financial strength rating of 6 out of 10 and a profitability rating of 7 out of 10.

As a result of a 29.6% decrease over the past year, the stock has a market capitalization of $57.64 million and a 52-week range of $0.88 to $2.65.

The company's top fund holder is UBS GLOBAL ASSET MANAGEMENT AMERICAS INC with 9.81% of shares outstanding, followed by Jim Simons (Trades, Portfolio) with 0.46% and Advisory Services Network, LLC with 0.12% of shares outstanding.

One analyst on Wall Street has recommended a buy rating with a target price of 96.50 Chinese yuan (about $14.14) per share for this stock.

Rubicon Technology Inc

The third stock short-term investors may want to consider is Rubicon Technology Inc (NASDAQ:RBCN), a Bensenville, Illinois-based provider of monocrystalline sapphire for applications in optical and industrial systems.

The stock was trading at a price of $8.60 per share at close on Thursday, which is about 19.5% below the net-net working capital of $10.69.

GuruFocus assigned a score of 8 out of 10 to the company's financial strength and a score of 2 out of 10 to its profitability.

After a 5.4% decrease in the share price over the past year, the market capitalization is $20.68 million and the 52-week range is $7.15 to $10.09.

On Wall Street, the stock has a hold recommendation rating with an average target price of $7.50 per share.

Bandera Partners LLC is the leader amid the company's top fund holders as it holds 10.85% of shares outstanding, followed by Jim Simons with 4.92% and Roumell Asset Management, LLC with 4.01%.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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