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 want to consider these three stocks listed below, as their share prices are lower than their net-net working capital.
Caladrius Biosciences Inc
The first stock short-term investors may want to consider is Caladrius Biosciences Inc (CLBS, Financial), a Basking Ridge, New Jersey-based clinical-stage biopharmaceutical developer of treatments for diseases and conditions caused by ischemia.
The stock was trading at a price of $1.52 per share at close on Thursday, which is more than 21.6% below the net-net working capital of $1.94.
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 32.44% decrease which happened in the past year, the stock has a market capitalization of $29.48 million and a 52-week range of $1.05 to $3.64.
The company's top fund holder is Jim Simons's firm with 4.78% of shares outstanding. It is followed by VANGUARD GROUP INC with 1.68% and ACADIAN ASSET MANAGEMENT LLC with 0.81%.
One analyst on Wall Street issued a hold recommendation rating for this stock.
Ra Medical Systems Inc
The second stock to consider is Ra Medical Systems Inc (RMED, Financial), a Carlsbad, California-based commercial-stage medical developer of excimer lasers that are used by physicians to treat vascular and dermatological immune-mediated inflammatory diseases.
The stock was trading at a price of $7.17 per share at close on Thursday, which is about 7% below the net-net working capital of $7.72.
The company holds a GuruFocus financial strength rating of 3 out of 10 and a profitability rating of 1 out of 10.
Following a 67.76% decrease that occurred in the share price over the past year, the market capitalization now stands at $20.93 million and the 52-week range is $4.25 to $67.20.
Jim Simons's firm is the leader amid the company's top fund holders with 4.71% of shares outstanding.
Wall Street sell-side analysts have recommended an overweight rating for this stock.
Jianpu Technology Inc
The third stock short-term investors may want to consider is Jianpu Technology Inc (JT, Financial), a Beijing, China-based operator of an internet platform where consumers can find information and recommendations about financial products and services.
The stock was trading at a price of $2.91 per share at close on Thursday, standing far below the net-net working capital of $3.32.
After a 75.57% fall which occurred over the past year, the stock has a market capitalization of $61.49 million and a 52-week range of $2.40 to $17.46.
MORGAN STANLEY is the leader amid the company's top fund holders with 51.75% of shares outstanding. The investor is followed by WELLS FARGO & COMPANY/MN with 39.51% and SC CHINA HOLDING LTD with 23.66%.
One analyst on Wall Street issued a hold recommendation rating for this stock.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Stock Picks for the Value Investor
- 3 Low Shiller Price-Earnings Ratio Stock Picks
- A Trio of Stocks With a Record of Sales and Earnings Growth
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