Net Current Asset Value Per Share – NCAVPS
A value created by professor Benjamin Graham in the mid-twentieth century to determine if a company was trading at a fair market price. NCAVPS is calculated by taking a company's current assets and subtracting the total liabilities, and then dividing the result by the total number of shares outstanding.
According to Graham, investors will benefit greatly if they invest in companies where
the stock prices are no more than 67% of their NCAV per share. A study
done by the State University of New York to prove the
effectiveness of this strategy showed that from the period of 1970 to 1983 an
investor could have earned an average return of 29.4%, by purchasing stocks
that fulfilled Graham's requirement and holding them for one
However, Graham did make it clear that not all stocks chosen in this manner will have excessive returns, and that investors should also diversify their holdings when using this strategy.