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HomeMarket7 Stocks That Sell for Less Than the Cash on Their Books

7 Stocks That Sell for Less Than the Cash on Their Books

None of seven companies with higher cash holdings than their market caps identifies by a Barron’s stock screen is making money. (Photo by LUIS ROBAYO/AFP via Getty Images)

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AFP via Getty Images

There’s no such thing as a free lunch, or a free stock, most of the time.

Yet this year’s spectacular selloff has left some shares trading for less than the cash the companies have on their books. It’s an opportunity for investors willing to pick up a stock essentially for nothing, if at considerable risk.

Early this month, a pair of companies in the auto sector showed how it can work. The autonomous driving technology company
Ouster
(ticker: OUST) is purchasing 
Velodyne Lidar
(VLDR), a rival, for essentially less than the cash on Velodyne’s books. The deal has been a win for Velodyne shareholders. The stock has gone to 98 cents a share from 89 cents, for a gain of about 15%. The
S&P 500
and
Nasdaq Composite
are both up about 5% over the same span.

Other stocks are trading for less than cash as well. Barron’s found seven in the Russell 3000 index of companies with small market capitalizations, none of which is making money. All are using cash instead of generating it, and they will need more money from investors to execute their business plans.

No large companies find themselves in this situation because businesses generally don’t get big without generating profits. Stocks of businesses that have raised money from investors, without earning anything, are the ones that can trade for less than the cash on the balance sheet.

Our list, in no particular order, is as follows: the quantum-computing firm
Rigetti Computing
(RGTI), pharmaceutical company
Chimerix
(CMRX), space launch services provider
Astra Space
(ASTR), software maker
Latch
(LTCH), internet company
ContextLogic
(WISH), the insurance risk platform
Root
(ROOT), and autonomous-driving technology company
TuSimple
(TSP).

TuSimple
and
Latch
are behind on their financial filings. And
TuSimple
and Rigetti are looking for new management.

While the group’s total market capitalization is about $1.7 billion, the companies have almost $3 billion in cash on their balance sheets. Wall Street expects the group to use up about $1.2 billion in cash in 2023.

Investors are no longer impressed with more speculative stocks that need external capital to keep growing. Shares are down about 84% so far this year, on average.

If there is one stock that Wall Street still has faith in it is
Chimerix.
All six analysts that cover the stock rate shares at Buy, according to Bloomberg.

The rest of the group only has 11 Buy ratings out of a total of 41. That is a Buy-rating ratio of about 26%. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.

Anyone who doesn’t choose to buy can still learn from this. “All that glitters isn’t gold” is one takeaway that comes to mind.

Buyer beware.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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