Thursday, August 05, 2010

Stocks Trading Below Cash per Share

If you can find a stock trading below its cash per share, you have a bargain. If the stock has no debt or little debt, then it is a better bargain. has just updated their list of stocks that are trading below their cash per share and have market caps above $100 million.

The cash per share is calculated by taking all the cash in banks of the company and dividing that number by the total shares outstanding. So if the company has $10 million in cash, and has 1 million shares outstanding, the cash per share is $10. If the stock trades for $5, then the Cash per Share Price ratio would be 2. The higher the number, the bigger the discount.

In this example, if the company went out of business today and had no debt, all investors would double their money plus receive a pro rata share of the sale of all the other assets of the company. In a way, it almost creates a base or floor for the price of the stock, because eventually the company will be noticed by either investors who will buy shares of the stock driving up the price or other companies who will attempt a take-over of the company.

Some of the companies that show up on the list include:

Actions Semiconductor Co., Ltd. (ACTS), a Chinese semiconductor company, has 3.14 in cash per share and sells for only 2.20 per share. In addition, the company is debt free.

American Railcar Industries (ARII) makes and sells hopper and tank railcars. The stock sells for about 12.75, yet the company has 15.04 in cash per share. The company does have some debt, $275 million, which is less than the cash they have on the books.

To see all the other stocks that are trading below cash, several of which are debt free, you can download a free Excel database of Stocks Trading Below Cash at

When going through this list, be careful of the ratios you see for the financial and investment companies, since the amount of cash for the financials is generally much higher than the cash balance of other sectors, due to the accounting of customer deposits.

Author does not own any of the above.


1 comment:

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