With over 9,000 stocks across NYSE, NASDAQ, TSX and AMEX, it's easy to see why Wall Street analysts still don't cover over 30% of stocks. This can be a great place to find gems overlooked by the banks and the investment community in general.
In particular, for the value investors amongst us, there can be decent companies trading at ridiculously low prices. These are what a lot of investors lovingly call "cigar-butts". This style of investing can be highly profitable but requires patience and more of a shotgun approach.
Warren Buffett moved away from this type of investing as he found that "time is the friend of a good business but the enemy of a mediocre business." However, many other successful value investors have found this approach highly profitable, including the venerable Seth Klarman and Walter Schloss, one of the 9 Super Investors.
We scoured the web to find stocks that are trading for around or less than their Net Cash. This means that on a per share basis, the market is ignoring the significant cash balance these stocks have so much that the amount of cash they have minus their Total Liabilities is almost equal to or more than these stocks' Current Price. Pretty insane!
These stocks are the definition of cigar-butts, but purchase them with caution. Sometimes these stocks are undervalued for a reason!
Check out these ridiculously undervalued stocks and see if they might have one last puff in them. We hope you'll use this list as a starting point in your analysis:
1. Gencor Industries (GENC)
GENC manufactures heavy machinery used in the production of highway construction materials, synthetic fuels and environmental control equipment. It has a cash balance of $74.2 million and a net cash position of around $68.6 million. GENC has a market cap of $66.6 million, just below its cash value. Interestingly, they've been profitable for 9 out of the past 10 years. Definitely worth digging deeper to see why the market is discounting it so much. Current Price is $7 and it has $7.21 in Net Cash per Share.
2. Ocean Power Technologies (OPTT)
OPTT develops and commercializes proprietary systems that generate electricity by harnessing the renewable energy of ocean waves primarily in North America, Europe and Australia. It has a cash balance of $30.39 million and a net cash position of around $23 million. With a market cap of $21.7 million, this company is trading at a great discount to its cash assets. However, this might be with good reason as the company has recorded a $20 million net loss annually since 2009. OPTT's Current Price is $2.09 and has $2.25 in Net Cash per Share.
3. HKN Inc. (HKN)
HKN engages in the exploration, exploitation, development, and production of crude oil and natural gas properties primarily in the onshore and offshore Gulf Coast regions of South Texas and Louisiana. It has a cash balance of $43.43 million and a net cash position of around $40.5 million. HKN has a market cap of $39 million, which is in line with its cash value. It has been losing money recently but minimally and somewhat inconsistently. HKN's Current Price is $2.25 and has $2.31 in Net Cash per Share.
4. Heelys Inc. (HLYS)
HLYS designs, markets and distributes action sports-inspired products under the HEELYS brand to the youth market. It has a cash balance of $58.4 million, a net cash position of $52 million and a market cap a bit higher at $60.9 million. Current Price is $2.21 with $1.89 in Net Cash per Share. This puts a value of $0.32 per share on any other assets HLYS holds and the entirety of its business. The company has been losing around $5 million in net income every year since 2008.
5. Actions Semiconductor Co. Ltd. (ACTS)
ACTS operates as a semiconductor company that designs, develops and markets integrated platform solutions, including system-on-a-chips (SoCs), firmware, software development tools, and reference designs for the manufacturers of portable media players. It has a cash balance of $220 million, a net cash position of around $190 million, and a market cap significantly below at $111 million. Current Price is $1.61 with $2.75 in Net Cash per Share - a huge discount. There are some questions as to the legitimacy of this organization as it is operating in China. However, if the numbers are true, it's a steal.
6. Keegan Resources Inc. (KGN)
KGN is a natural resource company that engages in the acquisition and exploration of gold deposits in West Africa. It has a cash balance of $229 million, a net cash position of $220 million and a market cap of $228 million. This company has consistently been losing money since 2002. It will need a significant catalyst to turn this around.