I was doing a screen for value stocks, and I discovered ISSI with its 1.03 price/book value ratio. Most of ISSI’s book value is cash. ISSI has a market capitalization of $251 million. It’s these smallcap stocks with balance sheet value that have the best chance of nabbing a respectable return in a short period time with little downside risk.
I had fabulous results in 2005 investing in another smallcap fabless semiconductor company with lots of cash, NeoMagic (NASDAQ: NMGC). I don’t expect ISSI to do as well, but this stock seems to have little downside risk. Looking at the chart, I see that during the last year it was, for a time, trading at over $9/share, and this leads me to hope that it might go back up there again. If I can sell at $9/share, that would be a 34% return on my buy-in at $6.73/share.
Once upon a time I might have spent hours reading through the 10K and figuring out exactly what the company did and what its business prospects were, but with experience comes the wisdom to realize that you don't need to do all that stuff to make money in the market.