Pursuant to my April 14th column on some new "triple-nets" (companies trading at between 2x and 3x net current asset value or NCAV), this weekend I identified a few more candidates. Finding them is the easy part (well, sort of), deciding whether they are investment worthy or just more "dogs with fleas" takes time.
Kimball Electronics (KE) currently trades at 2.88x NCAV. The company ended its latest quarter with $94 million or about $3.75/share in cash, and $86 million in debt. KE trades at about 12x next year's "consensus" earnings estimate, and with just one analyst covering the name, earnings surprises are very possible. The past two quarters the company beat the estimate by 76.5%, and 97%.
Engineering and construction name Matrix Service (MTRX) currently trades at 2.57x NCAV. The company has not been profitable for the past six quarters which is one of the reasons it trades relatively cheap in terms of NCAV. MTRX does have decent liquidity though, and ended its latest quarter with $93.5 million, or just over $3.50 per share in cash and no debt. There may be brighter days ahead. The consensus expects the company to be modestly profitable this year, and earn 62 cents next year, putting the forward price earnings ratio at about 21.
Admittedly, this next one is a real departure for me. Hyliion Holdings (HYLN) is not the typical triple-net I might be interested in, let alone even mention in a column. At this point, the company, which is developing electric powertrains for Class 8 trucks, essentially turning trucks into hybrids, has no revenue, and is simply a pile of cash and marketable securities. Currently trading at 2.64x NCAV, the company ended the fourth quarter with $570 million, or about $3.50/share in cash and short-term investments. HYLN is burning cash - it lost $39 million last year - and this play is incredibly speculative but I'm just browsing. The technology seems interesting, which may seem odd coming from a value investor, but the company has to deliver it to market.