Watchlist Wednesday: Net Current Asset Value by Mitchell Mauer
This article appeared first on The Stock Market Blueprint blog.
In this edition of Watchlist Wednesday, we highlight five of the top stocks qualifying for the Net Current Asset Value (NCAV) screen.
NCAV is a stock-selection strategy developed and implemented by Benjamin Graham as discussed in Security Analysis and The Intelligent Investor.
Net Current Asset Value – Description
Warren Buffett nicknamed it the “cigar-butt approach” because “a cigar-butt found on the street that has only one puff left in it may not offer much of a smoke, but the ‘bargain purchase’ will make that puff all profit.”
The screen finds stocks trading for less than the difference between current assets minus total liabilities. There is no regard given to the company’s long-term assets or future profits.
Here is a breakdown of the five stocks with the lowest price to net current asset value as found on TheStockMarketBlueprint.com:
- China Green Agriculture, Inc. (NYSE:CGA) – China Green Agriculture, Inc., through its subsidiaries, engages in the research, development, production, distribution, and sale of various types of fertilizers and agricultural products. The company markets its fertilizer products to private wholesalers and retailers of agricultural farm products in 27 provinces, 4 autonomous regions, and 3 central government-controlled municipalities in China. It also develops, produces, and sells flowers, green vegetables, fruits, and colored seedlings; which it sells to flower shops, luxury hotels, government agencies, supermarkets and upscale restaurants. China Green Agriculture, Inc. also exports its products through contracted distributors to India and Ghana. The company is based in Xi’an, the Peoples Republic of China.
- Current Assets: $331.44 Million
- Total Liabilities: $64.37 Million
- Total Shares: 36.93 Million
- Net Current Asset Value/Share: $7.23
- Current Price: $1.26 (closing price on 4/5/16)
- Price/NCAV: 17.4%
- SORL Auto Parts, Inc. (NASDAQ:SORL) – SORL Auto Parts, Inc. develops, manufactures, and distributes automotive brake systems and other safety related auto parts. It operates in two segments, Commercial Vehicle Brake Systems and Passenger Vehicle Brake Systems. Its products are principally used in various types of commercial vehicles, such as trucks and buses. SORL Auto Parts, Inc. markets its products under the SORL brand to automotive original equipment manufacturers and the related aftermarket. The company was founded in 2003 and is based in Rui’an, the Peoples Republic of China.
- Current Assets: $267.98 Million
- Total Liabilities: $120.39 Million
- Total Shares: 19.30 Million
- Net Current Asset Value/Share: $7.67
- Current Price: $1.67 (closing price on 4/5/16)
- Price/NCAV: 21.8%
- Emerson Radio Corp. (MSN) Emerson Radio Corp., together with its subsidiaries, designs, sources, imports, markets, and sells various houseware and consumer electronic products in the United States and internationally. It provides houseware products, audio products, and miscellaneous electronic and novelty products. The company offers its products primarily under the Emerson brand name; and licenses its trademarks to others on a worldwide basis for various products. Emerson Radio Corp. markets its products primarily through mass merchandisers. The company was founded in 1948 and is headquartered in Hackensack, New Jersey. Emerson Radio Corp. operates as a subsidiary of S&T International Distribution Ltd.
- Current Assets: $59.95 Million
- Total Liabilities: $3.22 Million
- Total Shares: 27.13 Million
- Net Current Asset Value/Share: $2.09
- Current Price: $0.85 (closing price on 4/5/16)
- Price/NCAV: 40.7%
- Richardson Electronics, Ltd. (RELL) Richardson Electronics, Ltd. engages in electron devices, customized display solutions, and healthcare equipment businesses in North America, the Asia Pacific, Europe, and Latin America. The company’s Electron Device Group segment provides engineered solutions and distributes electronic components for broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology applications. The company’s Canvys segment provides custom display solutions, such as touch screens, protective panels, custom enclosures, specialized cabinet finishes, and application specific software packages to corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturer markets. Its Healthcare segment manufactures, distributes, and services high value replacement parts, image systems, visual solutions for operating rooms/surgical environments, digital radiography solutions, and additional replacement components. The company was founded in 1947 and is headquartered in LaFox, Illinois.
- Current Assets: $138.76 Million
- Total Liabilities: $24.21 Million
- Total Shares: 2.14 Million
- Net Current Asset Value/Share: $10.31
- Current Price: $5.13 (closing price on 4/5/16)
- Price/NCAV: 49.8%
- Ever-Glory International Group, Inc. (EVK) Ever-Glory International Group, Inc. manufactures, distributes, and retails apparels primarily in the People’s Republic of China, the United States, Europe, the United Kingdom, and Japan. It operates through two segments, Wholesale and Retail. The company primarily offers casual wear, outerwear, and sportswear for men, women, and children. The company offers its woman apparel under the LA GO GO, Velwin, and Sea To Sky brands. As of December 31, 2014, it operated 1,201 stores, including 52 flagship stores as stores-within-a-store in large and mid-tier department stores located in approximately 20 provinces in China. Ever-Glory International Group, Inc. is based in Nanjing, the People’s Republic of China.
- Current Assets: $200.60 Million
- Total Liabilities: $149.93 Million
- Total Shares: 14.78 Million
- Net Current Asset Value/Share: $3.43
- Current Price: $1.83 (closing price on 4/5/16)
- Price/NCAV: 53.4%
Implementation
Late in his life, Benjamin Graham estimated that the net current asset value strategy earned him an average of 20% per year over 30 years. You can implement this strategy by regularly investing equal amounts in the qualifying stocks with the lowest prices in relation to net current asset value.
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Mitchell Mauer is the Founder of TheStockMarketBlueprint.com. The Stock Market Blueprint is a free site that finds value stocks for investors building long-term wealth. The site’s investment philosophy is anchored in principles established by Benjamin Graham and his most reputable followers over the last 100 years.
