3 Top Picks Under Ben Graham's NCAV Strategy

Mitchell Mauer |

Here, we highlight three stocks trading below their net current asset values (NCAV).

Investment managers and financial media pundits often say Benjamin Graham’s famous Net Current Asset Value stocks no longer exist. They claim the strategy can’t be implemented anymore because the stocks are too hard to find.

The Stock Market Blueprint’s NCAV stock screen currently shows nearly 20 US listed stocks selling below their NCAV. Several more are trading just slightly above this metric.

Considering that Graham suggested investing in baskets of 10-30 NCAV stocks, there appear to be more than enough opportunities for individual investors.

NCAV Description

NCAV is a stock-selection strategy developed and implemented by Benjamin Graham as discussed in Security Analysis and The Intelligent Investor.

Warren Buffett nicknamed it the “cigar-butt approach” because “a cigar-butt found on the street that has only one puff left in it may not offer much of a smoke, but the ‘bargain purchase’ will make that puff all profit.”



The screen finds stocks trading for less than the difference between current assets minus total liabilities. There is no regard given to the company’s long-term assets or future profits.

Here is a breakdown of the three stocks with the lowest price to NCAV as found on The Stock Market Blueprint’s NCAV stock screen.

Top Picks

American Lorain Corporation (ALN): Develops, manufactures, and sells various food products.

  • Current Assets: $181 Million
  • Total Liabilities: $89 Million
  • Total Shares: 38 Million
  • Net Current Asset Value: $2.41
  • Current Price: $0.59 (closing price on 2/16/17)
  • Price/NCAV: 24%

Sears Hometown & Outlet Stores, Inc. (SHOS): Engages in the retail sale of home appliances, lawn and garden equipment, tools, and hardware.

  • Current Assets: $470 Million
  • Total Liabilities: $219 Million
  • Total Shares: 23 Million
  • Net Current Asset Value: $11.08
  • Current Price: $3.90 (closing price on 2/16/17)
  • Price/NCAV: 35%

Emerson Radio Corp. (MSN): Designs, sources, imports, markets, and sells various houseware and consumer electronic products around the world.

  • Current Assets: $58 Million
  • Total Liabilities: $1 Million
  • Total Shares: 27 Million
  • Net Current Asset Value: $2.09
  • Current Price: $1.16 (closing price on 2/16/17)
  • Price/NCAV: 56%

Implementation

Build your own portfolio using the stock screens on The Stock Market Blueprint.

Check out our Shadow Stock Portfolios to see real-world examples of implementing systematic investment strategies.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MSN Emerson Radio Corporation 1.43 0.04 2.88 18,812
ALN American Lorain Corporation 0.36 0.00 0.00 1,702
SHOS Sears Hometown and Outlet Stores Inc. 2.40 0.05 2.13 40,598 Trade

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