Adding a New Screen

While I was feverishly flipping channels between all the playoff possibility baseball games last night, I had some time to ponder the concept of buying stock in companies that are currently losing money but expected to turn a profit within a year. Specifically, I began to wonder what would happen if we combined this idea with my core tangible book value metric. Could the strong possibility of a profit in the next year help lift the shares of companies that were undervalued on an asset basis? Judging by the results of the screen I ran this morning, I have been practicing this variation of this all along.

The screen turned up many companies that I already one. Near the top of the list is my favorite natural gas holding EXCO Resources (XCO). The company has struggled the past few years as natural gas prices have plummeted. Still, analysts expect the company to deliver a profitable bottom line next year. This company turned down a management buyout offer in 2011 for almost 3x the current price; the stock will likely trade back near those levels when gas pricing and drilling activity pick up. Some of the smartest investors on the planet own this stock -- Howards Marks, Boone Pickens and Wilbur Ross all own a large stake in company. I have owned it for some time and have no intention of selling it anytime soon....420 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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