5 NYSE stocks now trade below book value with little to no debt
Right now, a hedge fund manager in New York, working remotely, is starting to look for undervalued stocks, sometimes just called value stocks. Since the stock market has sold out so spectacularly, is there something tasty about the new low-priced lot that might look good in the long run?
The 2 most likely quick steps to finding such opportunities are: book value and amount of debt. Are there any stocks that are currently trading at levels below book value? Among this group, are there any with little or no debt? This is important because lack of debt tends to increase the likelihood that a business can survive a tough time.
Here are 5 actions that could match the mold:
American Eagle Outiffers
Right now, you can buy stocks at a 9% discount from book value. The price / earnings ratio of 6 is low, especially compared to the Standard & Poor’s 500’s share which now stands at 19. Profits are far this year even though the 5-year record looks good.
American Eagle has no long term debt and the current ratio is 1.4. Whether they can maintain the current dividend level at 8.15% would be a question – given the current conditions for clothing stores. The short float is around 10%, which would fuel a rally under the right conditions.
Janus Henderson Group is a London-based asset management company that operates globally.
The stock trades at 51% of its book value. The price / earnings ratio is 6.39. Profits are in the red this year. The results over 5 years are positive. The company has minimal long-term debt and the current ratio is 3.4. Janus Henderson at this price pays a dividend of 10.21%.
Tilly’s is a United States-based clothing, footwear and accessories chain. Their physical locations are closed, temporarily, but online sales continue.
Stocks can be bought now at a 33% discount from the pound and the price / earnings ratio is low at 4.75. Tilly’s has no long term debt on the books and a current ratio of 1.4. They don’t pay a dividend.
Third point of reinsurance is a property and casualty insurance company headquartered in Bermuda.
The stock trades at 47% of its book value. The price / earnings ratio of 3.32 is definitely low. Third Point has small, long-term debt – it is well overwhelmed by shareholders’ equity. The gains are great this year and the 5-year record is also good. There is no dividend.
Tenaris is a Luxembourg-based metal fabrication company – they manufacture steel pipes for the energy industry.
The shares are available for purchase at 61% of the book. The price / earnings ratio is 9.85. The 5 year profit record is negative but this year is pretty good. Equity far exceeds long-term debt. The current ratio is 3. At this price, Tenaris pays a dividend of 6.6%.
The fact that all these elements are listed on the New York Stock Exchange facilitates their research: a lot of information is available.
Just so there’s no confusion: these aren’t buy recommendations. The point is that with these measures, these stocks are likely to start appearing on the screens of value-seeking investment institutions during this time of great uncertainty.
I wrote about my take on the methodology of value stocks legend Benjamin Graham in this 2018 Forbes blog post.
Statistics courtesy of FinViz.com.
I do not hold any positions in these investments. No recommendation is made one way or the other. If you are an investor, you would like to explore each of these situations further. You can lose money by trading or investing in stocks and other instruments. Always do your own independent research, do your due diligence and seek advice from a licensed investment advisor.