Ranks of Tiny, Profitable Net/Nets Growing

by: Jon Heller, CFA

Call us strange, but we believe that a little market volatility can be a good thing. It helps wipe away market excesses, such as those that were the end result of credit that was too easy for too long, and poorly designed and misunderstood securities which have bankrupted many. (Notice, we did not use the “S” word)

We’ve whined for months about the lack of interesting companies—those worth further research—trading below their net current asset value, but recently, the situation has been looking up (or down depending on your reference point). We are beginning to see more profitable net/nets. Most are deep into the microcap space, but beggars can’t be choosers.

The criteria for this weeks net/net list is as follows:

  • Company profitable on a trailing 12 month basis
  • P/E ratio less than 50
  • Market Cap greater than $20 million

Ditech Networks Corp (NASDAQ:DITC)

  • Price: $3.34
  • Market Cap: $111 million
  • NCAV: $148.2 million
  • P/E: 40

Bexil Corp (OTCPK:BXLC)

  • Price: $31.15
  • Market Cap: $27 million
  • NCAV: $37.8 million
  • P/E: 42

Forward Industries (NASDAQ:FORD)

  • Price: $2.71
  • Market Cap: $21.1 million
  • NCAV: $24.6 million
  • P/E: 46

GSI Technology (NASDAQ:GSIT)

  • Price: $2.30
  • Market Cap: $65.1 million
  • NCAV: $66 million
  • P/E: 12

Eternal Technologies (OTC:ETLT)

  • Price: $.59
  • Market Cap: $27.8
  • NCAV:$48 million
  • P/E: 4

Atlantic Coast Entertainment Holdings (ACEH)

  • Price: $18
  • Market Cap: $179.4
  • NCAV: $220 million
  • P/E: 5

*Currently does not have an operating business, primary assets are cash

Good to see some unfamiliar names. We are also seeing a few other interesting companies that are not currently profitable. Perhaps we'll feature these in a future post.

Disclosure; Of the companies mentioned, the author has a position in Eternal Technologies (OTC:ETLT).