There are some investors who buy stocks that are trading below their liquidation value because they believe they can achieve impressive gains from their investments after the market has reassessed the share prices up to near or above the liquidation value. Should the company fail, these shareholders would in theory still be able to earn a profit due to a difference between the liquidation value and purchasing price.
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."
Thus, short-term investors may be interested in the below stocks, as their share prices are trading below their net-net working capital.
China Green Agriculture Inc
The stock was trading at a price of $2.31 per share at close on Monday, standing far below the net-net working capital of $18.52.
GuruFocus assigned a score of 6 out of 10 to both the company's financial strength rating and its profitability.
After a 50.6% fall which occurred over the past year, the stock has a market capitalization of $14.64 million and a 52-week range of $1.77 to $4.68.
Jim Simons is the leader amid the company's top fund holders with 0.54% of shares outstanding. The investor is followed by Cable Hill Partners, LLC with 0.23% and UBS Group AG with 0.05%.
One analyst on Wall Street issued a hold recommendation rating for this stock.
Millendo Therapeutics Inc
The second stock short-term investors may want to consider is Millendo Therapeutics Inc (MLND, Financial), an Ann Arbor, Michigan-based late-stage biopharmaceutical developer of various treatments for orphan endocrine diseases in the U.S.
The stock was trading at a price of $1.56 per share at close on Monday, which is more than 20% below the net-net working capital of $1.97.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength and a score of 1 out of 10 to its profitability.
As a result of a 78% decrease which happened in the past year, the stock has a market capitalization of $29.64 million and a 52-week range of $1.26 to $9.88.
The company's top fund holder is NEA Management Company, LLC with 9.3% of shares outstanding. It is followed by GREAT POINT PARTNERS LLC with 7.69% and Bpifrance SA with 5.68%.
On Wall Street, the stock has an overweight recommendation rating with an average target price of $4.33 per share.
UTStarcom Holdings Corp
The third stock to consider is UTStarcom Holdings Corp (UTSI, Financial), a Chinese provider of telecommunications infrastructure for the development of technology for bandwidth for several applications in China, India, Japan, Taiwan and internationally.
The stock was trading at a price of $1.12 per share at close on Monday, which is about 14.5% below the net-net working capital of $1.31.
The company holds a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 3 out of 10.
Following a 62.7% decrease that happened in the share price over the past year, the market capitalization now stands at $40.24 million and the 52-week range is $0.98 to $3.05.
Jim Simons is the leader amid the company's top fund holders with 3.21% of shares outstanding. The investor is followed by CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM with 0.17% and NORTHERN TRUST CORP with 0.06%.
One sell-side analyst on Wall Street has recommended a buy rating for this stock.
Disclosure: I have no positions in any securities mentioned.
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