Looking at a value screen that displays if any potential bargain opportunities exist despite the rally, the qualifying candidate list is much shorter than it was several months ago. Still, some interesting opportunities popped up.
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Screen Parameters
A variety of screen parameters (namely, asset-rich companies with little or no debt) were used. And in studying this list, it's also important to look for businesses that aren't losing money. But understand that stock screens aren't forward-looking. A low P/E stock today might not be there next year.
A Fun List
One of the first names to pop up is QLT Inc (Nasdaq:QLTI), a biopharmaceutical company that operates in the field of ophthalmology. QLT offers and develops drugs that focus on diseases of the eye. Shares trade for $3.30, implying a market cap of $180 million. The company has no debt and $2.47 in cash per share. Book value per share is over $5.50, and the current P/E is 1.3. But don't get excited, as net income has been falling. Still you are paying an approximate net of 80 cents for the business that earned three-times that much last year.
Molina Healthcare (NYSE:MOH) participates in government-sponsored healthcare programs - namely, Medicaid. Molina has 10 licensed health plans - but you're going to have to decide what the government health plan means for a business like Molina.
The company's market cap is $500 million, with $450 million in net cash on the balance sheet, and the P/E is 8. Because it's a healthcare company, most of the cash is likely statutory reserves held by each state plan, meaning that the company can't simply decide to make a special cash payment to investors. But it's an attractive balance sheet, nonetheless. And a big daddy like Unitedhealth (NYSE:UNH) or WellPoint (NYSE:WLP) could easily take this one over. (For related reading, check out Investing In The Healthcare Sector.)
KHD Humboldt (NYSE:KHD) is a construction and engineering firm that serves a wide variety of industries. The stock is $11, and net cash per share is also about $11. Most of the cash is in the form of contract advances, but it's still a great balance sheet for a business that will benefit from any international turnaround. (For more, check out Reading The Balance Sheet.)
The Bottom Line
Stock screens are an excellent way to generate ideas that may or may not lead to investment candidates. Always double-check the results of any stock screen with the company's most recent numbers, and happy bargain hunting!
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