Revisiting Some Net/Nets
The last time I wrote about one of my favorite deep-value-investing techniques, finding companies that trade below their net current asset value (NCAV), some fairly interesting names were at or near the top of the list in terms of market cap. Fast-forward four months, and at least some of them have graduated and no longer trade below NCAV. Typically, when that happens, it's a positive, because the price has run up, bringing the market cap back above the companies' NCAV. That's what you hope for when buying net/nets.
Benchmark Electronics (BHE), which has bounced on and off the list over the past couple of years, has once again left net/net land. Shares are up 33% since late September, and the stock now trades at 1.2x NCAV. That's still not expensive, and the quality of Benchmark's balance sheet is still very good. The company ended the third quarter with about $254 million, or $4.33 per share in cash, and just $11 million in debt. Benchmark still trades below tangible book value per share, at 15x trailing earnings and about 16.5x 2012 consensus estimates. That might not seem cheap, but for a company trading close to NCAV, it's still interesting. In all the years that I've been researching net/nets, profitable ones of Benchmark's size -- market cap of $986 million -- have been few and far between....317 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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