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It has been a while since I posted the results of my value screens. As recently as a few weeks ago, few interesting companies were meeting the stringent criteria that I set. With the recent market turmoil, more companies are finding themselves trading at attractive valuations. While the S&P downgrade will likely produce turmoil in the markets on Monday, below are a few interesting companies that might be worth tracking for good entry points as the week progresses.

I looked for profitable companies trading at market capitalization, where 80% of the market cap can be accounted for by the company's current assets less total liabilities. This screen is designed to allow us to focus on companies with a strong balance sheet that can provide some stability in these uncertain times. To perform this screen, I configured the Screener.co stock screener with the following criteria:

Exchange Country

=

"USA"

Total Current Assets(I) - Total Liabilities(I)

>

Market capitalization * 0.8

Earnings per Share, Normalized, Excluding Extraordinary Items, Avg. Diluted Shares Outstanding-TTM

>

0

Exchange Traded On

!=

"Over The Counter"

Country Located In

!=

"China"

This produces 55 results, as of 8/6/2011. Among those results are the following 8 that appear worthy of deeper analysis:

BHE

Benchmark Electronics, Inc.

BTN

Ballantyne Strong, Inc.

HOFT

Hooker Furniture Corporation

IM

Ingram Micro Inc.

KTCC

Key Tronic Corporation

NEI

Network Engines, Inc.

PARL

Parlux Fragrances, Inc.

PCCC

PC Connection, Inc.

Benchmark Electronics (BHE) is an electronics manufacturing company. Looking at their balance sheet, they have net tangible assets of $1.1B and current assets less total liabilities of over $860M. While $396M of those current assets are tied up in inventory, the company actually has $422M more cash and receivables than its total liabilities. Considering the company has a market cap of $833M, or less than twice that amount, BHE has a strong balance sheet.

While contract electronics manufacturers are highly cyclical and likely to face challenges if we are indeed about to enter another recession, BHE was actually cash flow positive in 2008, 2009, and 2010 and was only net income negative in 2008, as a result of a non-recurring, non-cash, charge.

Ballantyne Strong (BTN) is a theater and lighting equipment company that has benefited from theaters' conversions to digital and 3D projectors. What is interesting is that the company's market capitalization has dipped well below its net tangible assets even as the analysts expect the company to earn $0.09 a share in the current quarter and be profitable both this year and next.

I have been long BTN since its valuation dipped below net tangible assets and have seen the price drop further since that time. While there has been turnover at the CEO and VP of Finance levels, there has been no news regarding company performance that would explain the company's precipitous and continuous share price drop from the $5 a share range in June down to the low $3s today. The company reports earnings this morning so hopefully there will be either some explanation for the company's share price slide or a buying opportunity on earnings.

Hooker Furniture (HOFT) is a furniture company that is yielding 4.4% and has a market cap of $97M. It has net tangible assets of $123M, current assets less total liabilities of $82M, and just under $27M more cash and receivables than total liabilities. While furniture is also a cyclical market, the company was profitable in the fiscal years ending in Feb 2009, Feb 2010, and Feb 2011. I am adding HOFT to my watchlist.

Ingram Micro (IM) and PC Connection (PCCC) are both computer and electronics distributors. I have been long PCCC and was enthusiastic about the earnings and guidance that they offered last week. I chose to go long PCCC because their market cap represents only a small premium to their net tangible assets while they continue to report strong earnings.

While both IM and PCCC have cyclical businesses, it is worth noting that PCCC was profitable in 2008, only marginally unprofitable in 2009, and highly profitable in 2010. I chose PCCC over IM because IM has a much larger percentage of its current assets in inventory. Therefore, it faces more risk of inventory obsolescence in the face of slower than expected sales if we indeed enter another recession.

Keytronic (KTCC) is another electronics manufacturing company. It has a tiny $43M market cap and limited trading volume but sports net tangible assets of $66M. Looking more closely at the company's balance sheet, however, reveals that over $60M is tied up in inventory and PP&E. Given the cyclical nature of the company's market, the environment of uncertainty we find ourselves in, and the company's asset base, I am not surprised that it is trading at a discount to net tangible assets. As a result, it is not making my watchlist.

I have been long on Network Engines (NEI) since its recent and precipitous price decline from the $1.50/share range to below $1.20/share. The price has since rebounded to $1.26, giving the company a market cap of $54M relative to net tangible assets of ~$54M (looking at its recent press release including a Q2 balance sheet). Only $25M of the company's assets are in inventory or PP&E. The company makes network appliances that they sell to OEMs for deployment in enterprise IT settings.

The company was unprofitable in the years ending in September 2008 and 2009 but reduced SG&A significantly YoY in 2010 to bring costs in line while increasing gross profit. Analysts expect the company to earn $0.18 both this year and next, giving the company a low P/E ratio. Its current EV/EBITDA ratio is a mere 5.2x and its EV/Revenue is 0.15x. Those numbers would be even lower if its receivables in excess of total liabilities were taken into account.

Parlux Fragrances (PARL) makes celebrity branded fragrances, which it sells through perfume retailers as well as department stores. Its revenue is concentrated when looked at both from the perspective of celebrity licenses (Paris Hilton) and retailer sales (Perfumania). It is valued at a market cap of $58M while its balance sheet shows $106M of current assets relative to $15M of total liabilities. Even when accounting for $43.5M of inventory, its market cap seems especially low at first glance.

Reading the full 10-Q reveals, however, that the company reported a substantial $4.4M operating loss before interest and income tax benefit. Given the company's recent unprofitable performance, it really should not have made this list and we will modify this screen in the future so that it requires profitability in the most recent quarter as well as the trailing twelve month period.

Source: Finding Bargains Amid the Rubble: 8 Stocks to Watch This Week