Let's take another gander at stocks that currently pass my all-time favorite stock screen -- "net/nets," or companies that trade below their net current asset value.
Unfortunately, results for this screen are no less depressing than they are for many of my other deep-value screens. I'm all for record-high markets, but the current dearth of value stocks continues to amaze me.
Not much has changed since I last wrote about this screen in July. We continue to scrape the bottom of the barrel in net/net land, and there's simply not much to get excited about. The screen currently turns up just five non-biotech names with market caps of $50 million or more:
Richardson Electronics (RELL)
This stock has been showing strength recently, rising 23% over the past five weeks and trading at or near 52-week highs.
RELL currently fetches 0.75x net current asset value (NCAV) and yields 3.72%, which probably makes it the best of a rather sorry bunch.
ModusLink Global Solutions (MLNK)
This name is treading water, although it currently trades at just 0.98x NCAV.
ModusLink has $85.3 million in net cash, or $1.63 per share -- not bad for a stock that trades for around $1.28. However, MLNK needs to stop its balance-sheet bleeding or the company's net-cash levels will continue to fall.
Sears Hometown and Outlet Stores (SHOS)
I've tried to find something to like about this struggling chain, but I ultimately keep coming to the conclusion that it's too ugly even for me.
Sears Hometown trades at just 0.56x NCAV, but unsold inventory makes up the majority of the chain's net current assets and that's not ideal. After all, it's hard to accurately value how much a chain's inventories would be worth if the company shuts down.
SHOS also operates in an extremely competitive industry. Now, it's true that I've seen retail net/nets like Finish Line (FINL) , Conn's (CONN) , Tuesday Morning (TUES) and even Circuit City (years prior to its bankruptcy) sometimes turn things around. But I don't have much hope for Sears Hometown.
CDI Corp. (CDI)
CDI is a staffing company for the oil-and-gas industry, so it's not surprising that it continues to struggle.
The stock currently trades for just 0.95x NCAV, but CDI doesn't have much cash left -- $4.7 million as of the latest quarter's end, down from $39 million a year earlier. The company also ended its latest quarter with $26 million in debt and isn't expected to be profitable next year.
Trans World Entertainment (TWMC)
This specialty retailer is what I refer to as a "perennial net/net" because it's shown up on the list for years.
The parent of the F.Y.E. and Suncoast retail chains, Trans World Entertainment has been basically flat year to date and currently trades at just 0.82x NCAV. The firm has $90.9 million in cash, or about $3 a share for a stock that fetches just $3.50 or so.
Still, I just can't get too excited about a mall-based video and music retailer.
The Bottom Line
Net/net land continues to look very barren -- but unfortunately, the list will only improve if we get a market pullback.
After all, stocks close to making the cut typically suffer much-higher-than-average damage in down markets, due to what's typically their smaller size and lower quality. Having some dry powder will come in handy if and when that ultimately happens.
