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The First 4 Stock Picks for This Active Portfolio Could Be 'Controversial'

Let's unveil the first group of names I've selected for my 2022 Triple Net Active Portfolio.
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On Monday, I rolled out the 2022 vintage of my Triple Net Passive Portfolio. Today I'll be unveiling the first four of that group that I've selected for the Active portfolio. Over the next year, I will again track results of Active versus Passive, and both relative to benchmarks, which include the Russell 2000 Index, Russell Microcap Index, and the Value Index for each.

Boise Cascade (BCC) produces engineered wood and plywood products, among other things. BCC currently trades at just 2.23x net current asset value (NCAV), 6x 2023 consensus earnings estimates and 1.4x tangible book value.

BCC ended its latest quarter with $15/share in net cash. While the company's regular dividend of 12 cents/quarter provides a tiny 0.8% yield, it also pays out "supplemental" dividends, to the tune of $5.50 over the past year. In 2021, the supplemental dividend was $2. There are no guarantees BCC will follow suit in 2023, but it certainly has the cash to do so.

Watch maker Movado (MOV) trades at 2.71x NCAV, 7x 2024 "consensus" estimates (January year-end) and 1.49x tangible book value. the shares are down 28% year-to-date.

Movado ended its latest quarter with $203 million, or $9/share in cash and no debt. MOV currently yields 4.6%.

Firearm name Smith & Wesson Brands (SWBI) trades at 2.85x NCAV, 5x next year's consensus earnings estimates, and 1.39x tangible book value. The shares are down 43% year-to-date, and trading near a 52-week low. Since mid-August, the shares are off more than 30%, at least part of which is due to worse-than-expected first-quarter earnings.

SWBI ended its latest quarter with $1.57/share in net cash. The shares currently yield 3.9%.

Specialty retailer Fossil (FOSL) , trades at 2.43x NCAV, and just 0.48x tangible book value. The shares, which are down 66% year-to-date, are currently not covered by any analysts, so there are no earnings estimates.

Fossil ended its latest quarter with $167 million in cash, and $250 million in debt.

This first group of four is not without controversy. In this economic environment -- the recession is already here, in my view -- why would any investor consider owning these names, most if not all of which are highly sensitive to consumer spending? Most would not, and perhaps should not even consider them. However, it could be that a great deal of damage is already priced into these stocks.

All four names have relatively sizable amount of cash on their books, which should help navigate choppy waters to a certain extent. In addition, three of them pay decent dividends (assuming BCC will pay a supplemental dividend in 2022).

I will roll out the final Triple Net Active Portfolio picks on Monday.

At the time of publication, Heller was long BCC, MOV, SWBI and FOSL.