"I don't look to jump over seven-foot bars: I look around for one-foot bars that I can step over."
-- Warren Buffett
If you're in the market for those one-foot bars Buffett loves, here's one of the best places to look: companies beaten to such a pulp that just the net amount of cash on hand represents a significant portion of the share price. In some cases you're being handed the actual business operations for free -- or at least close to it. Doesn't get much better than that, does it?
Using our Motley Fool CAPS screening tool, I searched for companies fitting these bargain-basement criteria. Specifically, I looked for:
- Profitable over the past 12 months.
- No long-term debt.
- An extremely high level of cash in relation to current share price.
Pretty simple, eh? Among others, I came across these five:
|
Company
|
Market Cap
|
Recent Price
|
Cash per Share
|
Long-term Debt
|
Earnings (TTM)
|
CAPS Rating
(5 stars max.)
|
|
Activision Blizzard (Nasdaq: ATVI )
|
$12.1 billion
|
$9.04
|
$2.22
|
0
|
$0.06
|
*****
|
|
eBay (Nasdaq: EBAY )
|
$17.2 billion
|
$14.10
|
$2.85
|
0
|
$1.44
|
***
|
|
GigaMedia (Nasdaq: GIGM )
|
$330 million
|
$5.47
|
$1.91
|
0
|
$0.76
|
*****
|
|
The9 Limited (Nasdaq: NCTY )
|
$376 million
|
$11.84
|
$7.54
|
0
|
$2.02
|
*****
|
|
Thor Industries (NYSE: THO )
|
$689 million
|
$12.79
|
$3.21
|
0
|
$1.08
|
***
|
Data from Motley Fool CAPS, Yahoo! Finance, and Capital IQ as of Dec. 22. TTM= trailing 12 months.
You can run the same screen yourself by clicking here. None of these are formal buy recommendations -- just a good starting point for more research, and a strong indication that these companies might merit your attention.
I bought it on eBay!
A lot of investors hate eBay right now, perhaps for good reason: customers are peeved, growth is waning, and the business model is starting to look like a dinosaur. So is this thing dead, or what?
Nah. From a contrarian standpoint, all the mud being flung at eBay is good news. With shares off nearly 60% in the past year, investors are now looking at a company with roughly 20% of its market cap in cash, a rock-solid balance sheet, a world-class brand name, and an economy that'll be hunting for bargains like it hasn't in decades. As CAPS member Ag81 recently laid out:
Zero debt, great margins, and ridiculously low P/E relative to it's historical average, $3 billion in cash on hand, all lead me to think it's time to hop on profit making machine. In these current economic times, people will be looking for a bargain if they're in the buying mood, and/or selling some of their non-essentials to raise cash. In either case eBay wins. I'd normally stay away from this stock, but at these prices and this economy, I think it's too good a value to pass up.
The fact that eBay is developing from a growth juggernaut to a more stable and reliable company certainly shouldn't exclude it from your radar. You can pick apart as many ills as you like, but at less than 10-times 2009 earning estimates and analyst projects of 13% growth for the next five years, you might be criticizing to bargain hunters' delight.
An auto stock? Really?
Thor Industries has been pummeled in recent months for some of the same reasons General Motors (NYSE: GM ) and Ford (NYSE: F ) have been flushed down the toilet: As a manufacturer of recreational vehicles (RV's) and buses, it's dealing with a consumer strapped for cash who also relies on big, bulky, gas-guzzling products.
So what's it have going for it? Unlike the Big Three, Thor has an impenetrable balance sheet that'll allow it to weather the storm, and has proved that it can produce vehicles profitably. Factor in a market that doesn't want to touch anything transportation related, and some think Thor's positioned for a nice rebound once the economy perks up.
As CAPS player Awebb30 noted back in September:
Thor is a compelling company in a battered industry. Their competition is in ruins and may not survive this economic downturn. They are clearly the company with the resources and experience to weather the storm and emerge ready to capitalize on the massive baby-boomer demographic awaiting retirement. Aside from the RV market, the near-term opportunity available to Thor is in Commercial Busses as the world looks to expand on more efficient public transportation options. Currently, only 15% of Thor's annual sales come from their Bus lines, but I expect that to increase substantially as gas and diesel prices remain high.
One danger that could lie in Thor's way is a resurgence of sky-high gas prices that could squeeze the RV market. Still, with shares trading where they are, a lot of Thor's troubles are baked into the price.
Over 125,000 other investors are rating and ranting about thousands of stocks over at Motley Fool CAPS. Care to share your own thoughts? Click here to give it a whirl. It won't cost you a dime.
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