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EverydayInvestor (100.00)

The Cheap Stocks 21 Net/Net Index

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5

February 24, 2008 – Comments (5) | RELATED TICKERS: ADPT , FINL , VOXX

Below is info on the Cheap Stock 21 Index of companies trading below their net current asset value. See the performance info.

Please see the Cheap Stocks blog for more info. My bet is that this index will outperform the market substantially. I am considering just buying the index (with $1 per 200 share commissions at IB, this would not be very expensive).

Cheap Stocks 21 Net/Net Index Constituents and Weights (%, rounded):

Adaptec Inc(ADPT)18.72%
Computer Systems

Audiovox Corp(VOXX)12.20%
Electronics

Trans World Entertainment(TWMC)7.58%
Retail-Music and Video

Finish Line Inc(FINL)6.30%
Retail-Apparel

Nu Horizons Electronics(NUHC)5.76%
Electronics Wholesale

Richardson Electronics(RELL)5.09%
Electronics Wholesale

Pomeroy IT Solutions(PMRY)4.61%
IT

Ditech Networks(DITC)4.31%
Communication Equip

Parlux Fragrances(PARL)3.92%
Personal Products

InFocus Corp(INFS)3.81%
Computer Peripherals

Renovis Inc(RNVS)3.80%
Biotech

Leadis Technology Inc(LDIS)3.47%
Semiconductor-Integrated Circuits

Replidyne Inc(RDYN)3.31%
Biotech

Tandy Brands Accessories Inc(TBAC)2.94%
Apparel, Footwear, Accessories

FSI International Inc(FSII)2.87%
Semiconductor Equip

Anadys Pharmaceuticals Inc(ANDS)2.49%
Biotech

MediciNova Inc(MNOV)2.33%
Biotech

Emerson Radio Corp(MSN)1.71%
Electronics

Handleman Co(HDL)1.66%
Music- Wholesale

Chromcraft Revington Inc(CRC)1.62%
Furniture

Charles & Colvard Ltd(CTHR)1.50%
Jewel Wholesale

5 Comments – Post Your Own

#1) On February 24, 2008 at 9:48 PM, EverydayInvestor (100.00) wrote:

Oh, for those not familiar with the research, cheap stocks such as these on average WAY outperform the market. That's why buying into an index such as this is so intriguing--good returns while minimizing the volatility of such stocks.

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#2) On February 24, 2008 at 10:32 PM, abitare (99.61) wrote:

interesting....

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#3) On February 24, 2008 at 11:44 PM, EverydayInvestor (100.00) wrote:

This is a market-cap weighted index. I would probably buy in equal amounts. That tends to lower volatility, particularly when a couple stocks dominate an index.

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#4) On February 25, 2008 at 5:59 AM, DemonDoug (99.86) wrote:

I don't know man, some of those companies look like they are downtrodden without any real growth potential.  I mean, the top 4 companies are in industries that have a high amount of competition, and their market shares have been shrinking over the past 5 years.

And yikes, I just looked at what TWMC is - it's a brick and mortar retail store company.

Do we add some typewriter companies on here too?  Maybe some companies that make 8-track tapes and hand crank movie film cameras?  I'd like to see where this index is a year from now, if it indeed does beat the market. 

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#5) On February 25, 2008 at 9:57 AM, EverydayInvestor (100.00) wrote:

That's sort of the point. It's value investing at the extreme.

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