Editor's Note: This article was originally published at 2:00 p.m. EDT on Real Money on Aug. 1. To see Tim Melvin's latest commentary as it's published, sign up for a free trial of Real Money.
NEW YORK (Real Money) -- Today I want to finish up my review of stocks I consider cheap enough to own, regardless of your view of market conditions. As I wrote earlier this week, I find the current market and economic conditions more than a little scary, and I am as cautious as I have ever been. However, I follow a discipline of buying stocks at the "too cheap not to own" level, regardless of market conditions and opinions.
Given the run in the market the last few years, there are not a lot of these stocks to choose from, and I am keeping positions sizes fairly small so there is plenty of room to buy on a scale if needed. Again, these are stocks that I would be buying right now and not those that I may have purchased over the past few years and still hold. Pericom Semiconductor (PSEM) makes integrated circuits and frequency control products used to transfer route and time signals between computers, networks and telecom systems. Its products are used in laptops, notebooks, smartphones and a wide range of other electronic devices.
Pericom's revenue and earnings were basically flat in the second quarter, and I expect that the results will be pretty much the same when the company reports again. Computer sales are still weak, and Pericom is in the early stages of expanding into higher growth markets such as networking and crowd computing. The stock is cheap at a little under 90% of tangible book value, and the company had more than 70% of the stock price in cash and securities at the end of the first quarter.Cowen Group's (COWN) stock price has moved up a bit, but the stock is still cheap enough to buy at just 80% of tangible book value. The brokerage has a strong asset-management and alternative-investment arm, and the investment bank is well represented in key industries. Cowen has invested its capital well and since 1999 has earned more than 16% annually on its proprietary investment accounts. If the markets do collapse, I would be a big buyer of this stock, as Cowen would likely make a fortune in the aftermath from activist investment strategies and merger activity.
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