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Here’s a breakdown of the four best-ranked stocks on the Net-Net Working Capital (NNWC) screen.

NNWC is similar to the NCAV screen except it is more stringent. Graham knew that companies undergoing liquidation would not necessarily sell all current assets at book value.

In order to add a level of safety, he felt it beneficial to discount the accounts receivables and inventories when calculating current assets.

NNWC Description

Like NCAV, NNWC finds stocks trading for less than the difference between current assets minus total liabilities, and no regard is given to the company’s long-term assets or future profits.

But where NCAV accounts for 100% of a company’s current assets, NNWC builds a larger margin of safety by discounting both receivables and inventory.

Liquidation Value

To calculate the liquidation value of a stock using NNWC, the stock screen values a firm’s current assets at the following levels:

  • Cash & Cash Equivalents: 100%
  • Accounts Receivables: 75%
  • Inventories: 50%
  • Long-Term Assets: 0%

Click here to learn more about the NNWC stock screen.

Top Ranked NNWC Stocks

Here is a breakdown of five stocks with the lowest price to NNWC:

China Green Agriculture, Inc. (CGA): Engages in the research, development, production, distribution, and sale of various types of fertilizers and agricultural products.

  • Cash & Cash Equivalents (100%): $108 Million
  • Accounts Receivables (75%): $111 Million
  • Inventories (50%): $39.5 Million
  • Total Liabilities: $36 Million
  • Total Shares: 38 Million
  • NNWC: $5.92
  • Current Price: $1.21 (closing price on 12/29/16)
  • Price/NNWC: 20%

Emerson Radio Corp. (MSN): Designs, sources, imports, markets, and sells various houseware and consumer electronic products in the United States and internationally.

  • Cash & Cash Equivalents (100%): $52 Million
  • Accounts Receivables (75%): $850 Thousand
  • Inventories (50%): $2 Million
  • Total Liabilities: $3 Million
  • Total Shares: 27 Million
  • NNWC: $1.93
  • Current Price: $1.01 (closing price on 12/29/16)
  • Price/NNWC: 52%

Richardson Electronics, Ltd. (RELL): Provider of electron devices, customized display solutions, and healthcare equipment businesses in North America, the Asia Pacific, Europe, and Latin America.

  • Cash & Cash Equivalents (100%): $64 Million
  • Accounts Receivables (75%): $16.5 Million
  • Inventories (50%): $22.5 Million
  • Total Liabilities: $22 Million
  • Total Shares: 11 Million
  • NNWC: $7.53
  • Current Price: $6.21 (closing price on 12/29/16)
  • Price/NNWC: 82%

Support.com, Inc. (SPRT): Provides cloud-based software and services primarily in North America.

  • Cash & Cash Equivalents (100%): $54 Million
  • Accounts Receivables (75%): $7.5 Million
  • Inventories (50%): $0 Million
  • Total Liabilities: $9 Million
  • Total Shares: 55 Million
  • NNWC: $0.96
  • Current Price: $0.82 (closing price on 12/29/16)
  • Price/NNWC: 85%

Implementation

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Mitchell Mauer is the Founder of TheStockMarketBlueprint.com. The Stock Market Blueprint is a 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.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.