Is the Stock Market Overpriced When You Can Still Buy Stocks Below Cash?

If an investor is looking for stocks with favorable fundamentals, one of the best is the cash per share ratio. What this refers to is the amount of cash that would be distributed for each share if the entire company were liquidated today, and the proceeds divided among all the shareholders. That amount of cash would then be compared to the current price per share. If the stock is trading for less than the amount of cash per share, then it is a bargain.

In addition, if the stock has no debt, then it is even a better bargain, because in the event of liquidation, no loans would have to be paid off; all proceeds would go to the shareholders. With no debt and lots of cash, it’s hard for a company to go out of business, unless management spends money like drunken sailors.

The big question is, do such stocks exist? Here are a few.

Barnwell Industries, Inc. (BRN) is a producer and distributor of natural gas in Canada. The cash per share is 2.25 per share, yet the stock sells for only 1.55. This debt free company trades at 26 times trailing earnings. The stock also has a very favorable price to sales ratio of 0.87 and about a 23% discount to book value.

Chimerix, Inc. (CMRX) is a biotech company involved in the development of oral antivirals. This debt free stock, which is currently trading at 4.71 per share, has 5.90 in cash per share. The company is currently generating negative earnings, but on the positive side, it has a price to book value of 0.73. (SPRT) is a provider of cloud-based software and services. The debt-free stock has total cash per share of 1.05, yet sells for 87 cents per share. Earnings have been negative.

Potential investors should be aware that all of the above are low cap companies and should be considered very speculative. If you like interesting stock lists like this, check out the menu at the top of this page.

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