Debt Free Stocks Selling Below Cash

Are you looking for stocks that are almost guaranteed not to go out of business? If so, you should look for stocks selling below cash per share. In fact, if you want an almost certain way of of making a profit, putting your money into stocks selling below cash is the way to go. Many stocks have been beaten down to very low prices due to tax selling, creating bargain basement opportunities.

Here is what it means when a stock sells below cash per share? First, assuming the company has no debt,  you take the amount of cash that the company has in the bank and divide it by the outstanding number of shares. That represents the cash per share. If a stock is trading for less than that amount, it is a bargain, because if the company went out of business immediately, everything would be liquidated and disbursed on a per share basis. Even if all the company’s inventory, equipment, and real estate were worth nothing, all that cash would provide the investor with a profit.

Once a stock sells for below cash per share, it starts to attract t6he attention of hedge funds, analysts, and companies looking for a takeover candidate, all of which can drive the price of a stock up. You may be wondering, do such stocks really currently exist? The answer is ‘Yes’ and here are a few of them.

Emerson radio (MSN) is a marketer of consumer electronic products and various housewares. The company has about $1.91 in cash per share, yet sells for less than half that amount. The stock trades at 7.5 times forward earnings. The company is debt free.

NeuroMetrix (NURO) makes and markets wearable neuro-stimulation therapeutic devices. Cash per share is $1.37, with the stock selling more than 20% below that. This debt free company has been generating negative earnings, but the stock has a favorable price to sales ratio of 0.70.

OncoGenex Pharmaceuticals (OGXI) develops products that are designed to block the production of specific proteins that promote treatment resistance in cancer. The stock is selling for less than half the amount of cash per share. The company has a small amount of debt.

Here are a list of several below cash stocks.

Symbol	Price	Cash/shr	Discount to Cash	Debt/Equity
MSN	0.82	1.91	57.07%	0
NURO	1.06	1.37	22.63%	0
OGXI	0.46	1.09	57.80%	0.01
ONTX	2.63	3.50	24.86%	0
PCO	6.20	6.58	5.78%	0
RBCN	0.52	0.60	13.33%	0
SPRT	0.70	0.97	27.84%	0
VICL	2.55	3.40	25.00%	0
WGA	0.20	0.22	9.09%	0

Remember to do your research before investing, since most of these have very low market caps and limited trading which reduces liquidity. If you like interesting stock lists like this, you should check out many of the stock lists here.

Disclosure: Author owns RBCN, SPRT, and VICL.

Low Debt/No Debt Stocks Selling Below Cash per Share

One of my favorite screens for stocks are the ones that are debt free. It's hard to go out of business when a company has no debt. If you can find a debt free company selling below book value (the value of the stock if the company goes out of business today, everything the company owns is sold off, and the company liquidates, with distributions to all shareholders), then it is very hard to go out of business.

And if the company has no debt and is selling below its cash per share, then it is extremely difficult to go out of business. Management would have to be spending money like a drunken sailer for that to happen (or the company could have reported fictitious numbers e.g. Enron).

So I take notice when I find stocks with no debt or very little debt and selling below cash per share. The cash per share is basically all the company's cash on hand and cash equivalents, divided by the number of shares of the company. If the company went out of business immediately, couldn't sell off any of its equipment, real estate, inventory, or other assets, and had cash per share to distribute to shareholders that exceeded the price of the stock currently, then a profit is almost guaranteed.

One example is Payment Data Systems (PYDS), a provider of integrated electronic payment processing services. The stock closed at 2.35 per share on Friday, yet has 5.40 per share in cash, a 3.05 discount to cash, or on a percentage basis, a 56.5% discount. The company trades at six times cash flow, and has a reasonable price to sales ratio of 1.78.

Another example is Emerson Radio (MSN), a marketer of houseware and consumer electronic products. The stock is trading at 1.04 per share on Friday, yet has 1.78 per share in cash, a 41.6% discount to cash per share. The company has a price to earnings ratio of 20.8, and an extremely favorable price to sales ratio of 0.43.

For a list of a dozen stocks that are trading below cash and are debt free or almost debt free, go to WallStreetNewsNetwork.com. Keep in mind that most of these stocks are very low cap, and low priced, so therefore are very speculative.

Stock on WallStreetNewsNetwork List Up 49% on Friday

In case you missed it, earlier this week on Wednesday, July 10, I wrote an article called Stocks Selling Below Cash per Share - Getting Stocks at a Discount which described how risk can be reduced by finding stocks trading below the amount of cash per share, especially if the company has low or no debt.

The Below Cash Stock ~ And Debt Free

Two stocks were included in the writeup, Emerson Radio Corp. (MSN) and Career Education (CECO), and the article referred to the free list of stocks selling below cash at WallStreetNewsNetwork.com. One of the stocks which was one the list of about ten stocks was iGo, Inc. (IGOI), the company that makes and markets power products for mobile electronic devices, such as chargers and surge protectors. The stock was trading at 2.28 on Wednesday, and closed at 2.29 on Thursday. This was approximately a 36% discount to the company's cash per share. In addition, the company has no debt.

iGo Really Did Go - Up!!!

After the market close on Thursday, it was announced that Steel Excel (SXCL) made a cash tender offer to purchase up to 44% of the outstanding shares of the common stock of iGo at a price of 3.95 per share. This is a premium of over 71%.

Huge One Day Increase

On Friday, the stock opened at 3.37 on the news, and closed at 3.42 for the day, about a 50% increase (49.34% to be exact).

By the way, Emerson Radio is down eight cents from Wednesday, but Career Education is up 3.4%.

Stocks Selling Below Cash per Share

Getting Stocks at a Discount

Investors who are looking for turn-around situations in the stock market, yet want to reduce their risk, should look at stocks selling below cash per share. This means (in simple terms) that if you take all the company's cash in the bank, divide it by the number of shares, the result would be higher than what you could buy the shares for. If the company has little or no debt, then if the company went out of business today, you would receive more than what the shares are trading for.

There are several stocks selling below cash per share that have been identified by WallStreetNewsNetwork.com. Obviously, when stocks sell this cheap, there is usually some sort of negative issue associated with it, but if you are a contrarian, you may find a gem in the junk pile.

Electronics

One example is Emerson Radio Corp. (MSN), the New York Stock Exchange traded marketer of house-ware and consumer electronic products, such as DVD players, microwave ovens, compact refrigerators, clock radios and televisions. The stock, which currently trades at 1.77 per share, sells way below its book value of 2.66 per share, and 18% below its cash per share of 2.15. The company only has $83 thousand in debt. The stock trades at only five times earnings. On the downside, latest quarterly revenues and earnings were down by over 40%. A one time large dividend distribution to the shareholders could send this stock higher. The company has been in business since 1948.

Education

Career Education (CECO) operates colleges, schools, and universities that are in career-oriented disciplines. Its operations include Colorado Technical University and American InterContinental University. Degree and certificate programs are numerous and include technology, criminal justice, computer science, engineering, health sciences, culinary arts, hotel and restaurant management, fashion, interior design, film and video production, and construction. The stock sells at an 18% discount to its cash per share of 4.29. The stocks trades at 3.52, way below its book value of 8.90. Total debt for the company is only $103 thousand. Earnings for the latest reported quarter were negative and the company will report second-quarter 2013 financial results on Wednesday, August 7, 2013, after the market close. This Illinois based company was founded in 1994.

For a free list of over ten stocks trading at or below cash per share, go to WallStreetNewsNetwork.com. The list includes current price, cash per share, debt, P/E ratio, and discount to cash per share. Please keep in mind that although the turnaround percentage gains on these stocks can be huge, the risks are high because of the low capitalizations and usually poor earnings. I hope you find your gem.

Disclosure: Author didn't own any of the above at the time the article was written.

By Stockerblog.com