Time to turn over more rocks to look for potential value -- not an easy task these days. To do so I've once again turned to my triple-net screen, which identifies stocks trading between 2x and 3x net current asset value, or NCAV. NCAV is calculated by subtracting total liabilities from current assets.
New pickings are pretty slim these days, but there are a handful, but identifying them is just the beginning and further due diligence is always necessary before making an investment decision. This search is merely a starting point in that it identifies companies that may be cheap relative to NCAV.
Super Micro Computer (SMCI) currently trades at 2.83x NCAV. It is not a new name, has appeared in other value searches I've conducted over the years, and historically has tended to trades at relatively low levels of NCAV. In fact, it was a member of my 2018 Double Net Value Portfolio.
SMCI currently trades at about 11.5x next year's consensus earnings estimates, and retains a fairly solid balance sheet with $316 million, or $6.13 per share in cash, and $46 million in debt. Shares have been on the move, and are up 86% over the past year, and 25% year-to-date.
Seneca Foods (SENEA) , (SENEB) whose name may be familiar as a provider of packaged fruits and vegetables, currently trades at 2.51x NCAV. Shares currently trade a 3.5x trailing earnings (I would not put too much stock in that number), but since no analysts cover the name, there are no earnings estimates.
The company does have some interesting assets, including more than 10 million square feet of manufacturing and warehouse space located on 9800 acres. Most of these assets are company owned. SENEA ended its latest quarter with $14 million in cash and $126 million in debt. It does have some other attributes to be aware of including a dual share class structure, as well as preferred stock. Seneca has just 9 million shares outstanding, and average trading volume of less than 50,000 shares/day.
Food for thought (pun intended) for now, stay tuned for more.
