The following procedure assumes that you already have a free ADVFN account. If not you can sign up here.
How To Screen For UK Stocks Selling Below Their Cash
Once you’ve logged into ADVFN click on ‘sitemap’ as shown below:
You’ll be presented with a drop down menu on which you should choose ‘UK Screener’ as indicated in the graphic:
For US and Canadian stocks the procedure is pretty much the same 🙂
In the next screen, choose ‘Start Filter X’ as shown in the below graphic:
At the top of the next screen you’ll see three options to reveal drop down menus, choose the drop down menu from the middle option as shown in the graphic below:
The following drop down menu will be revealed on which you should choose ‘Price To Cash PS’ as shown in the below graphic:
The next thing ou’ll need to do is choose ANY of the figures in the column PCPS as shown in the graphic below:
Next you’ll be presented with a screen in which you need to accuratly enter information in order for your screener to work. Just copy what’s in the graphic below. Don’t forget to hit submit but only once you’ve entered all of the information:
Once you hit submit you will be presented with a list of stocks that are selling at or below their cash.
Pretty neat huh?
Don’t forget to save your screener and give it a name:
Note how ADVFN shows you your inputs under the heading ‘New Filter’
How To Use A List Of Stocks Selling Below Cash To Find Bargains
Your work does not end at simply building a screener.
A screener like this gives you a handy list of Graham and Dodd style stocks from which to conduct further research.
To keep things simple, here is a list of 8 questions you need to answer before considering a purchase:
- Is the current ratio more than 1.50?
- Is the stock selling at or below it’s tangible book value per share?
- What does the company do?
- Are managers sensibly using cash to turn around the company’s fortunes?
- Why is the stock selling for below it’s cash?
- Are there any sector/industry specific pressures that the company is facing?
- Are you able to find enough companies similarly selling at bargain prices to make up a sufficiently diversified portfolio?
- Do managers pay themselves too much via stock options and annual pay?
Answering this simple set of questions will give you a much deeper understanding of your stock and a greater appreciation of the potential risks and opportunities that the company will face in the future.
For more information on how to look at a company’s assets as a basis for stock valuation, check these posts out:
- Why Graham and Dodd Is Still Relevant Today
- What Is A Balance Sheet?
- Testing Benjamin Graham; Final Results 2013
- What Has Worked In Investing
- How To Research Undervalued Stocks
- HMV: A Lesson For Value Investors