Nasdaq Stocks Now Trading Below Book Value

For fans of Benjamin Graham-style investing

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John Navin
Jul 12, 2021

Summary

  • Benjamin Graham-style value stocks actually exist on the Nasdaq.
  • If you can handle the low "average daily volume" of these smaller equities, they may be worth a look.
  • These are regional banks that pay dividends.
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Even though leading big tech stocks that make up the Nasdaq are showing some of the highest price-earnings ratios ever, it's still possible to find just a few low price-earnings stocks. An investor must be willing to accept the condition of low trading volume in return for the Benjamin Graham-style "below book value" part of the larger equation.

Each one of these stocks pays a dividend, has positive earnings per share and seem to have reasonable debt-to-equity situations. Almost all of these are regional bank stocks so they are very likely to be affected by Federal Reserve decisions about interest rates and by other factors related to the Fed.

Amalgamated Financial Corp. (

AMAL, Financial) is based in New York with branches in Manhattan, the Bronx and Brooklyn. The stock is trading at a 10% discount from it book value and the price-earnings ratio is a mere 9.9, well below that of the market as a whole. There is no long-term debt on the books. Earnings are positive for this year and positive on the five-year time frame as well. Amalgamated is paying a 2.06% dividend yield. Average daily volume is only about 76,000 shares, which is very low but not all that unusual for this type of microcap stock.

Hanmi Financial Corp. (

HAFC, Financial), headquartered in Los Angeles, describes itself as "the first Korean-American bank...now serving all Americans." With a price-earnings ratio of 9.9 and now available for purchase at just 96% of book, it qualifies as a value stock. Although the 5-year earnings record is slightly in the red, Hanmi is showing earnings per share growth this year of 30%. A 2.63% dividend is being paid. Shareholder equity exceeds long-term debt. The low average daily trading volume of just 150,000 shares is something to consider.

Kearny Financial Corp. (

KRNY, Financial) operates out of Fairfield, New Jersey with branches throughout the state. Now trading at a 10% discount from book value and with a price-earnings ratio of 16, Graham would likely approve of this regional bank as value. Investors are receiving a dividend yield of 3.37%. The financial institution has no long-term debt, typically a highly favored and rare quality. Earnings per share are positive for this year and for the five-year track record. There's more liquidity with Kearny than for the other two stocks mentioned: average daily volume comes to about 325,000 shares.

To repeat, when considering investments in bank stocks, whether major companies or these smaller regional ones: the effects of decisions made by the Federal Reserve are huge. Taking positions in this sector requires the investor to keep a close eye on interest rates and on the direction of the bond market, usually the same thing.

For the holder of low-volume stocks, it's important to think about the potential for liquidity issues. For example, when major market selloffs occur, it may be difficult to sell at the price desired. This is true, however, for high volume stocks as well. Diversification of holdings is usually a good idea.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Not investment advice. Investors should conduct their own thorough examination and analysis of stocks and markets. Before making decisions, it's important to first consult with a registered investment advisor.
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