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How to screen for cash value stocks in a bear market?

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bear markets are times of uncertainty for investors as the market resets its parameters and preferences to determine stock value. While revenue growth momentum and high expectations are enjoyed in bull markets, it is replaced by tangible value and stability during bear markets. The most tangible asset a company can own is cash. In basic terms, a stock that trades below cash is considered undervalued. This can be an advantage for a recovery as well as stability to fall much further. When looking for trading or investment candidates, this can be a starting point before applying further technical and fundamental analysis to determine if it’s right for your portfolio.


MarketBeat.com – MarketBeat

Cash per share

The cash-per-share is usually: a floor to the extent that a share price can fall. Theoretically, if a stock trades below its present value per share, you get the company for free. Fundamentally, there is usually a problem with the operations or strategy that caused the sale of stocks below cash value. In most cases, the underlying stock is even a speculator’s guess. Sure, many companies aren’t worth the paper the stock is printed on, but the money makes it viable. In addition, undervalued stocks can attract the attention of arbs and potential buyers. It is the perception of value that sometimes becomes a self-fulfilling prophecy.

How to Screen for CPS Value Stocks

This requires the use of a stock screener that allows you to find stocks trading at or below CPS as in “CPS>Stock Price” or a variable of Share Price as a cash-to-cash ratio. You can find a free basic screener at Finviz.com. For example, a Price-to-Cash (PTC or P/C) ratio of more than 1 means the stock is trading higher than the CPS. A PTC above 2 means the stock is trading twice as much as the CPS. When scanning for the CPS value, the Price/Cash (PTC) setting should be less than < 1.

Filter by P/C<1 stocks

This scan finds numerous stocks that meet this formula. The key is to continue filtering the candidates. Since liquidity is important, you can customize the list to prioritize the highest daily trading volume. You can also filter by price/earnings (P/E) and keep adding to the filters to get to a handful of filters before applying technical analysis. Stick to stocks that serve the US, so exchange rates and volatility don’t apply. Avoid Chinese names as the numbers cannot be verified. Additional filters can be positive revenue growth and low long-term debt.

CPS does not apply to financial data

It is worth noting that financial stocks, including banks, asset managers, insurers or REITs, should be avoided when using the CPS valuations. This is largely because the company often only holds the money for customers or customers and technically isn’t theirs to spend.

Be aware of sector pressures and debt

Some sectors may be under pressure and have low CPS readings across the board. For example, airline shares were crushed as an epicenter industry during the pandemic and continue to trade well below cash value. It is therefore important to determine whether certain sectors or industries as a group are under fundamental pressure. The airline industry is known for its massive debt load, which is why stocks trade below CPS values. The rare gems are stocks showing profitability (P/E) trading below the CPS (P/C<1).

How to screen for cash value stocks in a bear market?

Applying Fundamental Statistics

Once you’ve found the handful of stocks that fit the criteria, it’s a good idea to research them both fundamentally and apply technical analysis using charts. Shares of Acacia Research Corporation (NASDAQ:ACTG) trade at $5.02 versus $12.94 cash per share. It is profitable with a P/E of 5.7 and lately close to 7 million shares per day. The market cap is just above the sales level and shows positive EPS growth of 26.4%. It looks fundamentally undervalued.

How to screen for cash value stocks in a bear market?

Applying technical analysis to find opportunistic pullback levels

Using the gun cards on the weekly and daily timeframes provides an accurate picture of the landscape for ACTG stocks. Weekly Gun Chart Hits Low Near $3.39 Fibonacci (fib) level before rallied to the 50-period moving average (MA). The 200-period weekly MA support is priced at $4.00. The weekly puppy breakout has a rising 5-period MA support at $4.64 and a 15-period MA support rising at $4.47. The weekly stochastic mini-puppy through the 70 band. the weekly market structure layer (MSL) buy triggered on the breakout of $4.30. The daily rifle chart expands the Bollinger Band (BBs) as the upper BBs rise to $4.76. The daily 5-period MA is rising at $4.76 and the 15-period MA at $4.56. The daily stochastic has bounced through the 70 band. Cautious investors can watch for opportunistic pullback levels at the $4.69 fib, $4.40 fib, $3.83 fib, $3.56 fib and the $3.39 fib level. Upward trajectories range from the $9.09 fib level to the $12.94 cash-per-share value level.

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