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It’s an
unusual anomaly to be able to buy stock in a company for roughly
the same price as the cash they have on their books. However,
with the decline in real estate prices and escalating oil
prices, we see that happening with
three small cap stocks: zipRealty (ZIPR),
Housevalues (SOLD)
and Autobytel (ABTL).
zipRealty
zipRealty shares had
held up rather well during the market down-turn earlier this
year. This was especially impressive considering it’s exposure
to the declining real estate market. However, over the last few
weeks ZIPR’s shares have declined significantly to close today
at $4.00. While that might seem justified for an online real
estate agency in a declining housing environment, taking a
closer look at the balance sheet indicates that the market may
be over-selling this stock. With $72M in cash and NO debt,
zipRealty’s current cash holdings equates to $3.59 per share
(90% of current share value). That would mean that the market
values zipRealty’s business at only $.41 per share!
Housevalues
Meanwhile,
Housevalues shares
have been rather stagnant lately and closed at $2.86
today. Housevalues has $63M in cash on it’s balance
sheet and less than $2M in debt, which gives a cash value of
$2.53 per share (88% of current share value). The net $.33/share
valuation seems too low even with the current housing slump.
Autobytel
Autobytel shares have
really suffered this year dropping over 58% ytd to close today
at $1.13. The dramatic run-up in oil prices seems to have been
the most likely cause as sellers dumped the stock in
anticipation of automobile advertisers cutting their budgets.
However, with the recent decline in oil prices (now less than
$129/barrel) this may be the time to take a position in this
stock. In addition, Autobytel has almost $44M in cash and NO
debt. That currently equates to $.99 per share (88% of current
share value)! So in effect, investors have the opportunity to
invest in this business at $.14 per share.
With these
stocks trading so close to their cash value, there seems to be
limited downside risk in the short-term and potential for a nice
bounce back as the market takes notice. Should the market not
take notice a potential suitor certainly will. These companies
would all make attractive M&A targets due to their low
valuations and high cash balances.
At the time this article was
published, the author held a financial position in Autobytel.
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