5.51 tangible book value trading for $3.30, worth more dead
Found another potential deep value play trading below balance sheet tangible book value.
When the market is relatively unattractive, I like to look for deep value stocks now while I wait for better value in growth stocks and/or wait for bear spreads to work ;-) .
Deep value, or cigar butts, or net net stocks, or balance sheet plays are companies that have fallen so far in price that they over shoot the net assets on the balance sheet. The price on deep value stocks has fallen too far and potentially creates opportunity. But looking at price alone wont reveal this. You have to read the financial statements and count up the assets minus liabilities, or use trading views fancy ratios like I have on the chart. These are companies that may be worth more dead than alive, as in liquidated.
JRSH Jerash might be interesting as a deep value play. It even makes money, which is rare.
Its like finding a rental house for a cheap price and then finding a bunch of valuables in the garage that make the house even cheaper. JRSH price is 3.30 ish and there is 5.51 in tangible book value latest quarter. The more conservative net current asset value per share is 3.31. If JRSH falls even lower than 3.31 it almost become a arbitrage if the company continues to generate profit. They help manufacture consumer products for other big name businesses like VF corp (vans shoes), New Balance, and Dick's Sporting Goods.
Deep value stocks can also be considered de-risked. The down side risk is far lower than other stocks. Its statistically and quantitatively cheap. Just like Grandpa Warren Buffett and his mentor Benjamin Graham liked to buy.
Cigar butts have downside still if business turns south and continues to bleed. But at least theres is no premium on the stock since its already near liquidation value or value of all the assets if they had to liquidate.
The upside for deep value plays is that they can often reach their tangible book value level, and sometimes go up even higher if business improves and is recognized as a potential grower. GME Gamestop was once a deep value play, auto makers often are near tangible book value, and same with banks.
I always look at tangible book value, and I recommend you look too. Trading View makes it easy.
Cheers.
When the market is relatively unattractive, I like to look for deep value stocks now while I wait for better value in growth stocks and/or wait for bear spreads to work ;-) .
Deep value, or cigar butts, or net net stocks, or balance sheet plays are companies that have fallen so far in price that they over shoot the net assets on the balance sheet. The price on deep value stocks has fallen too far and potentially creates opportunity. But looking at price alone wont reveal this. You have to read the financial statements and count up the assets minus liabilities, or use trading views fancy ratios like I have on the chart. These are companies that may be worth more dead than alive, as in liquidated.
JRSH Jerash might be interesting as a deep value play. It even makes money, which is rare.
Its like finding a rental house for a cheap price and then finding a bunch of valuables in the garage that make the house even cheaper. JRSH price is 3.30 ish and there is 5.51 in tangible book value latest quarter. The more conservative net current asset value per share is 3.31. If JRSH falls even lower than 3.31 it almost become a arbitrage if the company continues to generate profit. They help manufacture consumer products for other big name businesses like VF corp (vans shoes), New Balance, and Dick's Sporting Goods.
Deep value stocks can also be considered de-risked. The down side risk is far lower than other stocks. Its statistically and quantitatively cheap. Just like Grandpa Warren Buffett and his mentor Benjamin Graham liked to buy.
Cigar butts have downside still if business turns south and continues to bleed. But at least theres is no premium on the stock since its already near liquidation value or value of all the assets if they had to liquidate.
The upside for deep value plays is that they can often reach their tangible book value level, and sometimes go up even higher if business improves and is recognized as a potential grower. GME Gamestop was once a deep value play, auto makers often are near tangible book value, and same with banks.
I always look at tangible book value, and I recommend you look too. Trading View makes it easy.
Cheers.