• 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. / Stocks

Rolling Out My 2019 Double Net Value Portfolio

Despite disappointing performance this year, the strategy has shown solid return in the past.
By JONATHAN HELLER
Dec 19, 2018 | 12:00 PM EST
Stocks quotes in this article: CATO, VRA, DRQ, AVT, AVX, UVV, BHE, HIBB, HURC, AE, GENC, TITN, POWL, ASTE, AGX, BPI, ZEUS, RCKY, FLXS, CNXN, TPC, AXTI

I am rolling out the 2019 vintage of the Double Net Value Portfolio, comprised of seemingly cheap names relative to net current assets (current assets minus total liabilities). Despite the 2018 portfolio's disappointing performance, the strategy has shown solid return in the past.

The screening criteria remain rather simple:

  • Companies trade at between 1x and 2x net current asset value (NCAV)
  • Minimum market cap $150 million
  • No development-stage pharmaceuticals/biotechs

This year, 22 names make the cut, up from 20 last year, and they are equally weighted. Not surprisingly, there are several repeat offenders from last year -- including Avnet (AVT) , AVX Corp (AVX) , Universal Corp (UVV) , Dril-Quip (DRQ) , Benchmark Electronics (BHE) , Hibbett Sports (HIBB) , Hurco Companies (HURC) , Adams Resources & Energy (AE) , and Gencor Industries (GENC) .

Familiar newcomers to the list include retailers CATO Corp  (CATO) and Vera Bradley (VRA) . CATO had a wild ride in 2018, as did many small specialty retailers, starting the year at around $13 before rising to about $26 in July, and then falling to $14. It currently yields 9.2%, finding itself back in high-yield territory -- a bit of déjà vu.

VRA has also had a roller coaster year, staring at around $12, then rising to nearly $17 by September, but it's been all downhill since. VRA, which closed at $8.7 on Tuesday, was one of the small specialty retailers I held on in 2018. Disappointing third-quarter revenue and earnings put the company in the doghouse last week, sending shares to a two-year low. But the balance sheet remains solid. VRA ended the latest quarter with $132 million --more than 43% of its market cap  -- or $3.75 per share in cash investments. VRA trades at 1.61x net current asset value (NCAV), and with a sub-$190 million market cap, could make a nice acquisition.

It's nice to see some new names in the portfolio -- including Astec Industries (ASTE) , Argan (AGX) , Titan Machinery (TITN) , Powell Industries (POWL) , Bridgepoint Education (BPI) , Olympic Steel (ZEUS) , Rocky Brands (RCKY) , Flexsteel Industries (FLXS) , PC Connection (CNXN) , Tutor Perini (TPC) , AXT Inc (AXTI) appeared in the 2017 Double Net Value portfolio.

In terms of portfolio statistics, the average market cap is $736 million, average price-to-book ratio is 1.03, and average multiple of price to NCAV is 1.64. And 18 of the names are currently profitable on a trailing twelve month basis; these have an average trailing price earnings ratio of 13.

I will provide periodic updates on portfolio performance: The good, the bad and the ugly.

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, Guilfoyle was long VRA, HIBB.

TAGS: Fundamental Analysis | Investing | Small Cap | Stocks | U.S. Equity

More from Stocks

Does the Big Bounce Mean More to Come? Let's See What Drove the Move

James "Rev Shark" DePorre
Jun 24, 2022 4:42 PM EDT

Much of the rally can be attributed to structural reasons, not fundamentals, technicals, or even macro ones.

MongoDB Is Poised for a Rally

Bruce Kamich
Jun 24, 2022 2:15 PM EDT

Here's our initial upside price target for MDB which provides a general purpose database platform.

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.

When Times Are Tough, These 3 Mega-Caps Should Deliver the Dividends

Bob Ciura
Jun 24, 2022 1:00 PM EDT

Here's why in recessions and bear markets, the right mega-cap stocks can offer security -- and good yields.

Atlassian Is Now in the Latter Stages of Its Decline

Bruce Kamich
Jun 24, 2022 12:22 PM EDT

Let's check the charts and indicators.

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

  • 08:55 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 10 personality traits of successful traders an...
  • 12:08 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    As a Portfolio Name Agrees to a Merger, Here's Our...
  • 10:44 AM EDT PAUL PRICE

    My Very Best Pick for the Next 12 Months

    American Woodmark . It rarely gets better than th...
  • 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