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NEW YORK (
TheStreet) -- Today it's back to business, and I am thankful for that. Whether or not you were happy with the election results last night, I for one am ready to move on and let the chips fall where they may.
(Just for the record I was wrong on two of my three election predictions, and although that's a decent batting average in baseball, it's not so decent when it comes to elections. Congratulations to my fellow contributors at
TheStreet who nailed last nights' results.)
The truth is that deep value, at least where I look for it, is a bit scarce these days, and I am not finding a whole lot of new opportunities. In fact, I'm seeing some of the same companies popping up on some of my deep value screens that were there two years ago. Although this does necessitate that I dig deeper, it does not mean that I'll be buying just for the sake of buying.
I often look at companies trading for less than book value, and many of the screens I employ utilize low book value as criteria in one form or another. For instance, more often than not, net/nets (companies trading at less than net current asset value) also trade for less than book; that's just the nature of the beast.
But book value by itself often includes intangible assets, such as goodwill, patents, trademarks, and other assets that may or may not have any economic value. In the case of, say
Coca Cola(KO), intangibles may actually have a great deal of value.
But in other cases, it's difficult to make that argument. Stripping out intangible assets from book value, and identifying companies trading for less than tangible book value per share can provide some interesting candidates for further analysis.
Beyond searching for companies trading below tangible book value, I also add the following criteria:
No financial names
Long-term debt to equity less than 50%
Companies must be profitable on a trailing 12-month basis
Minimum market cap of $100 million
This screen actually reveals dozens of candidates. High on the list in terms of market cap is
Corning(GLW - Get Report), which has been all but rejected by the market. Corning currently trades with a price-to-tangible book ratio of 0.84 and a price-to-earnings ratio of 9.5 (based on trailing earnings). This name, which also yields 3.1%, is showing up on a lot of value screens these days.
The energy sector is represented by
Hess(HES - Get Report), which trades at about 0.91 times tangible book, and trades at 15 times trailing earnings.
Rowan(RDC), which trades with a price-to-tangible book ratio of 0.9, and
Patterson-UTI Energy(PTEN) also made the cut.
HES Tangible Book Value Per Share data by
In the always interesting world of small-caps, we find a somewhat forgotten name, workforce solutions company
Kelly Services(KELYA) (0.83 times tangible book), and greeting card name
American Greetings(AM) (0.83 tangible book).
Perhaps the most interesting name, at least in terms of the company's business, is
Omega Protein(OME), which harvests Menhaden, an oily fish also known as "bunker" for use in Omega 3 vitamin supplements (which are promoted as reducing cholesterol and reducing the risk of heart disease), and fish meal, which is used for animal feed.
Fish meal represents about two-thirds of company revenue. This company has been very volatile over the years, as storms and the Gulf oil spill have wreaked havoc on the company's facilities and ability to fish (the company has been compensated by insurance and oil-spill funds). There also have been limitations placed on the Menhaden harvests in some areas. There's also been some controversy recently as to whether fish oil supplements are actually effective in fighting heart disease.
I've owned this name in the past a couple of times, and it has never been boring.
HES data by
At the time of publication, Heller had no positions in stocks mentioned.
Follow @JonMHellerCFAThis article is commentary by an independent contributor, separate from TheStreet's regular news coverage.