• 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
  3. / Energy

A Flyby Over Value's Backwater

These names frequently trade at low multiples to current assets and may (but may not) be worthy of purchase.
By JONATHAN HELLER
Oct 26, 2016 | 03:00 PM EDT
Stocks quotes in this article: SXCL, MLNK, SHOS, TWMC, RELL, WMAR

The ever-declining population of net/nets (companies trading below net current asset value) continues to display revolving-door tendencies. Names that qualified for net/net status years ago will reappear from time to time; sometimes these are what I term perennial net/nets, which describes companies that for one reason or another tend to trade at a low multiple of net current assets by nature and may not necessarily be worthy of purchase. Some might call them value traps. The difficult part is separating the perennials from those worthy of purchase.

Steel Excel (SXCL) is the latest example of a repeat net/net offender. Formerly ADPT Corp., and before that Adaptec, the company morphed from a storage business to a shell company to one that now has interests in oil and gas exploration and sports through its Steel Coaching System. The company is controlled by Steel Partners, which owns 58% of the shares (hence the name).

From an operating perspective, there's not much to get excited about, although last quarter the company was fairly close to breakeven. It's the balance sheet that's most interesting. SXCL ended its latest quarter with $165.9 million, or $16 per share, in cash and short-term investments. Excluding debt of $42.7 million, the company has nearly $12 per share in cash and currently trades at about $11.45. It also trades at just over 50% of tangible book value per share.

In addition, there were $139 million in operating loss carryforwards that expire between 2022 and 2035. Given the stock's light volume as well as control by Steel Partners -- the company's chairman is Steel Partners' Warren Lichtenstein, who is also executive chairman of former net/net ModusLink (MLNK) -- this one is not for everyone.

Elsewhere in net/net land, not much else has changed. Sears Hometown and Outlet Stores (SHOS) , which I still would not touch, continues its decline. The only other investable qualifiers with market caps in excess of $100 million include perennial names Trans World Entertainment (TWMC) , Richardson Electronics (RELL) and West Marine (WMAR) .

Richardson has cooled off recently after a challenging quarter, but still has $5 per share in cash, yields 3.9%, and trades at just 0.63x tangible book value per share. My latest net/net acquisition, West Marine, announced fourth-quarter results yesterday, but I have not yet had time to dig into them. It does appear that they narrowly beat consensus revenue estimates but missed on earnings (15 cents a share versus a 17-cent consensus). It could be an interesting day for the stock.

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, Heller was long MLNK, RELL and WMAR.

TAGS: Investing | U.S. Equity | Technology | Energy | Earnings | Entertainment | Gaming | Stocks

More from Energy

What Do Politicians and Sentiment Have in Common? (They Both Flip-flop)

Helene Meisler
Jun 30, 2022 6:00 AM EDT

The market is falling victim to shorter, smaller rallies -- and lots of chop. But here's why we're getting closer to overbought. Also, let's check on some gas and diesel.

Can Generac Generate Enough Technical Power to Rally?

Bruce Kamich
Jun 29, 2022 11:55 AM EDT

Sometimes the fundamentals and technical indicators are on the same page and sometimes they are not.

Let's Look Under the 'Shell' of This ESG-Style Fund

Mark Abssy
Jun 28, 2022 2:00 PM EDT

One of the Nuveen Global Net-Zero Transition exchange-traded fund's largest holdings is Shell, so let's drill down on this supposedly environmentally friendly ETF.

The Fed Blinked and So Did We

Peter Tchir
Jun 27, 2022 9:30 AM EDT

Here's what we need to get a bigger rally.

See That Down the Road? It's the Big 'Green' Bubble, Ready to Pop

Jim Collins
Jun 24, 2022 1:30 PM EDT

Environmental, social, and corporate governance has created a monster and gullible investors should hit the brakes on their EVs and run from the Washington technocrats while they have the chance.

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

  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • 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