The shares "look cheap, given that book value is likely understated, reflecting low cost land from years past," David Englander says, making the case for PICO Holdings (PICO) in this weekend's "Sizing Up Small Caps" section of Barron's.
Of PICO's three main business units (Vidler Water, UCP, and a canola-seed crushing plant), Vilder and UCP look set to outperform going forward.
Vidler's "water rights are located in states where there are water shortages [and] as housing recovers, home builders will need to secure water for their properties," Englander notes.
UCP (a developer PICO acquired during the crisis) has generated cash through a public offering ($108M) and home sales ($40M in FY13).
With the stock trading close to book value, investors could see upside of 50-75%, Englander thinks.