There are some investors who buy U.S.-listed stocks that are trading below their liquidation values because they believe they can gain a lot from these stocks after the market has reappraised the share prices to near or above the liquidation value.
Should the company have financial problems leading to insolvency, these shareholders would, in theory, still be able to benefit from the distribution of the liquidation value, which will most likely be higher than the purchasing price. The liquidation value of these so-called net current asset value stocks is calculated as "current assets minus total liabilities."
Thus, short-term investors could be interested in the two companies listed below, as their stock prices are trading below their net current asset value per share (NCAVPS).
Nano Dimension Ltd
The first stock to consider is Nano Dimension Ltd (NNDM, Financial), a Ness Ziona, Israel-based provider of an innovative and additive manufacturing system called New DragonFly IV. This technology is designed to help aerospace and defense, automotive, consumer electronics, semiconductor and medical companies to customize several electronic products. These include professional multilayer circuit boards, radio frequency antennas and various devices.
The stock was trading at a price of $4.45 per share at close on Thursday, which stands below the net current asset value per share of $5.32 as of the September 2021 quarter.
Following a 40.17% drop that happened over the past year, the stock now has a market capitalization of $1.14 billion and a 52-week range of $4.20 to $17.89.
The recent acquisition of Essemtec AG, a Swiss provider of solutions to equip printed circuit boards with electronic components, is expected to provide Nano with a larger customer base while diversifying its portfolio of 3D-printing technologies. In this way, Nano hopes to be better positioned to catch expected strong tailwinds from pent-up demand created by wide industry supply chain disruptions.
From the third-quarter earnings report, it seems that Nano is already building up its sales, but it has a long way to go before it can generate positive operating income.
Catherine Wood (Trades, Portfolio) is leading the group of the company's top fund holders with 7.38% of shares outstanding. Her ARK Autonomous Technology & Robotics ETF accounts for 3.28%, and the ARK Next Generation Internet ETF has 2.10%.
On Wall Street, the stock has a recommendation rating of buy with a target price of $10 per share.
The second stock short-term investors could be interested in is Dril-Quip Inc (DRQ, Financial), a Houston, Texas-based provider of equipment and services to global oil and gas companies that operate in harsh environments or deep-water.
The stock was trading at a price of $19.11 per share at close on Thursday, standing below the net current asset value per share of $20.16 as of the September 2021 quarter.
Following a 43.14% decrease that occurred over the past year, the stock now has a market capitalization of $676.22 million and a 52-week range of $18.17 to $40.62.
U.S. coordinated action to release strategic crude oil stockpiles, coupled with travel limitations to reduce the spread of the Omicron variant, have pushed Crude Oil WTI and Brent Oil Futures with expirations in February 2022 down 18.8% and 15.63%, respectively, in the past month. This is not a positive sign for Dril-Quip, but the long-term outlook for the sector remains good.
BlackRock Inc. is the leader amid the company's top fund holders with 15.91% of shares outstanding, followed by KAYNE ANDERSON RUDNICK INVESTMENT MANAGEMENT LLC with 11.91% and VANGUARD GROUP INC with 10.22%.
Sell-side analysts on Wall Street recommend a median rating of hold for this stock with an average target price of $25.80 per share.