Saturday, 21 July 2007

Top Five Profitable Double Net/Nets

Today we again lighten our constraints, and feature the top five profitable
companies trading at less than two times net current asset value, in order of market cap. And no, we are not getting soft in our old age. Companies trading at less than twice current assets less all liabilities (and preferred stock) typically have very strong balance sheets. Throw in profitabilty, which most net/nets can't claim, and you've got a potentially formidable combination.

While Ben Graham preferred candidates trading at less than 2/3 NCAV, and we've typically focused on those trading at less than NCAV, these companies might be a couple cuts above the typical cigar butt.

Top Five Profitable Double Net/Nets by Market Cap
Ingram Micro (IM)
Mkt Cap: $3.7 billion
NCAV: $2 billion
Mkt Cap/NCAV: 1.85
Price: $21.78
P/E: 15.6

Sycamore Networks (SCMR)
Mkt Cap: $1.18 billion
NCAV: $892 million
Mkt Cap/NCAV: 1.32
Price: $4.21
P/E: 61

Exar Corp (EXAR)
Mkt Cap: $530 million
NCAV: $357 million
Mkt Cap/NCAV: 1.49
Price: $14.76
P/E: 67

Adaptec (ADPT)
Mkt Cap: $452 million
NCAV: $388 million
Mkt Cap/NCAV: 1.17
Price: $3.80
P/E: 15.3

Farmer Brothers(FARM)
Mkt Cap: $340 million
NCAV: $200 million
Mkt Cap/NCAV: 1.7
Price: $21.79
P/E: 65

Farmer Brothers is the only company we've previously covered, and frankly, the others on this list-all tech related- aren't exactly our cup of tea. We are not making a judgement on them, we just typically shy away from businesses we don't understand.

*The author does not have a position in any of the stocks mentioned in this report. This is neither a recommendation to buy or sell any of these securities. All information provided believed to be reliable and presented for information purposes only. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.

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