Boss Holdings (OTCBB:BSHI.OB) is selling at less than its net current asset value, making it potentially attractive for investors who look to purchase stocks selling at low valuation relative to assets.
Boss Holdings operates in three lines of business: 1) protective work gloves and protective wear, 2) promotional and specialty products and 3) pet supplies. The work gloves and protective wear segment is the company's largest and accounted for 68% of sales in 2007. It sells gloves, boots and rainwear products to both consumer and industrial users. The promotional and specialty products segment sells balloons, balls and other inflatable products through a network of 10,000 distributors. The pet supplies segment sells non-food pet supplies under the brand names Warren Pet and Boss Pet Products.

Net Current Asset Value Play

As of June 30, Boss Holdings is selling at 61% of its net current asset value, which is calculated as the total amount of a company's current assets minus total liabilities.

Current Assets $ 27,651
Total Liabilities $ 6,318
Net Current Asset Value $ 21,333
Shares Outstanding 2,018

NCAV Per Share $ 10.57
Price Per Share $ 6.46
Price To NCAV 61.1%

Benjamin Graham

The concept of owning a portfolio of stocks selling below current net asset value was popularized by Benjamin Graham, who thought it provided a margin of safety to investors when owning a stock. Graham advised purchasing at two-thirds of a company's net current asset value. The theory is that the company can be liquidated by selling all the current assets and using the proceeds to pay off all liabilities, leaving a large amount for shareholders. Other stocks selling below net current asset value include Chromcraft Revington (AMEX:CRC) and Avatar Holdings (Nasdaq:AVTR). (For more reading on Ben Graham, check out The Intelligent Investor: Benjamin Graham.)

Other Details

Investors also need to know that Boss Holdings is profitable, but sales and earnings have been flat for two years. Also, in the first six months of 2008, the company earned only 6 cents per share versus 15 cents in the first six months of 2007. Although some of its lines of business are seasonal, the weakening economy is clearly impacting its business. Other companies hurt by the economy and slowdown in consumer spending are Corning (NYSE:GLW), which reported a slowdown in sales of Liquid Crystal Display (LCD) glass for use in televisions, and Ford Motor Co. (NYSE:F), which has been hurt by the slowdown in auto sales.

Boss Holdings is a smaller reporting company under rule 12b-2 of the Securities Exchange Act of 1934. This is defined as a company with public equity float of less than $75 million. If the public float can't be calculated, the below-$50 million-revenue threshold is used to determine whether a company qualifies. The Securities and Exchange Commission (SEC) requires much less disclosure for a company that qualifies as a smaller reporting company. This status might make it more difficult to analyze the company's financial results. (For more information on the SEC, see Policing The Securities Market: An Overview Of The SEC.)

Boss Holdings also trades on the Over-The-Counter Bulletin Board (OTCBB). This reduces liquidity and makes the stock more difficult to trade. The average daily volume for the last three months is only 225 shares.

Bottom Line

Boss Holdings' low valuation relative to its assets makes it an attractive company for investors who look for stocks selling below net current asset value.

Related Articles
  1. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  2. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  3. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  4. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  5. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  6. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  7. Investing News

    Could a Rate Hike Send Stocks Higher?

    A rate hike would certainly alter the investment scene, but would it be for the better or worse?
  8. Investing News

    Corporate Bonds or Stocks: Which is Better Now?

    With market volatility high, you may think it is time to run for corporate bonds instead of stocks. Before you do take a deeper look into which is better.
  9. Mutual Funds & ETFs

    Using Short ETFs to Battle a Down Market

    Instead of selling your stocks to get gains, consider a short selling strategy, specifically one that uses short ETFs that help manage the risk.
  10. Investing Basics

    How to Diversify with International Stocks

    Diversifying with international stocks can benefit most portfolios, but beware of country risk.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!