• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Seeking Almost-Perfect Stocks

These value picks offer everything but a dividend.
By TIM MELVIN Jun 18, 2013 | 04:00 PM EDT
Stocks quotes in this article: NWPX, SPLP, CDE

Sometime in the next 24 hours, we will hit Fed fever pitch as pundits and prognosticators attempt to guess the outcome of the Fed meeting. Everyone will be breathless to see if the Federal Open Market Committee's statement includes language about tapering or otherwise unwinding quantitative-easing programs.

My personal guess is that the committee has seen a chart of the bond market in the past few weeks and will tiptoe around the question to avoid spooking the markets. It is worth noting that my personal guess is just as worthless as all the other estimates, guesses and predictions that are floating around. I am in the cheap-stock business, not the wild market guessing game, so I will stick with my rock-kicking. If something extreme happens as a result of the Fed announcement, I will be in a position to react to it, but I am not making stock market wagers on what the Fed may or may not say on Wednesday.

Today I reset my screen to look for almost-perfect stocks. These stocks are trading for less than book value and are profitable and well financed but do not pay a dividend right now. Although I am a big fan of dividends, not all companies are in a position to pay them, or they prefer to use excess cash to buy back shares. As long as the buyback is done at prices lower than the value of the company, I believe this is an acceptable practice. Others use their cash to grow the business, and some safe and cheap stocks are in a trough and are just muddling through and need to conserve cash right now.

One of the more interesting companies on the list from a long-term perspective is Northwest Pipe (NWPX). The shares trade just below book value, and the company is profitable. Business for this company is not spectacular right now, but there are lots of reasons to believe that it will accelerate sometime in the next decade. Northwest makes pipes for water transmission and other drinking-water-related infrastructure projects. The tubular division makes pipes used in the oil and gas industry, construction and the agricultural industry. Given the stall speed of the economy, none of the businesses are particularly robust at the moment, but all should experience very high rates of growth when the economy does finally get back on track. Five years ago, this was a $60 stock. I believe it will be that and more before too many years go by.

I am particularly intrigued by Steel Partners Holdings (SPLP). This is a conglomerate of business run by Warren Lichtenstein, who has run a hedge fund by the same name for some time now. Steel Partners owns controlling stakes in wide range of businesses and has minority positions a few other companies. This is basically a deep-value activist hedge fund that has stakes in a wide range of industries, from hot dogs to defense contractors. Lichtenstein has overseen several successful turnarounds during his career as an activist investor, and he should be able to help the portfolio companies see marked improvement in performance over time. This should be an excellent long-term holding for most investors.

There is yet another silver miner on the list, as the miners continue to be punished by traders and investors. Coeur Mining (CDE) operates in the U.S., Latin America and Australia. The company has a solid cash position and has been buying back stock to take advantage of the current low valuation.

The company is focusing on its domestic operations to avoid some of the political risk of mining, particularly in Latin American markets. Several mines have had to close or curtail operations recently because of political problems, and management wants to avoid these potentially costly problems. The stock is trading at just 60% of tangible book value, and the company is profitable. I have no idea what gold and silver prices will do in the short run, but I am pretty sure that buying the largest domestic producer of silver and second-largest producer of gold at a steep discount to asset value should pay off for patient investors.

Although I am kicking rocks and looking for value, I am not running to press the "buy" button right now on most stocks. If you do not already own silver miners such as Coeur Mining, Pan American Silver (PAAS) or Hecla Mining (HL), you should probably buy some here. On the other two stocks, I will sit back and hope the Fed scares the market into some panic selling, to enable me to buy them lower.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Melvin had no positions in stocks mentioned.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider NWPX and SPLP to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

TAGS: Investing | U.S. Equity

More from Investing

Market Mistrust May Make for a Move Higher

James "Rev Shark" DePorre
May 26, 2022 4:41 PM EDT

This lack of faith in the market could help put more pressure on the upside, here's how.

Raising HAL

Bruce Kamich
May 26, 2022 3:43 PM EDT

Shares of Halliburton have the energy to make new highs, according to the charts.

When the Markets Are a Game of Risk, Keep This Fund in Your Quiver

Mark Abssy
May 26, 2022 3:15 PM EDT

This ETF manages risk in a nuanced way.

At Some Point, Commodities Find Balance, Too

Maleeha Bengali
May 26, 2022 2:23 PM EDT

Don't forget about the importance of timing and demand as we look at wild moves in oil from the Covid lows to now.

AbbVie's Correction Appears to Be Over: Here's Where the Stock Could Be Headed

Bruce Kamich
May 26, 2022 2:19 PM EDT

Should you be a buyer?

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:46 PM EDT STEPHEN GUILFOYLE

    We're Shedding Some of This Holding on Strength

    Check out the Stocks Under $10 portfolio here!
  • 11:33 AM EDT PETER TCHIR

    Thoughts Ahead of the Fed Minutes

    Recent economic and earnings issues are convincing...
  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login