A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for American Outdoor Brands and Tarena International. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
American Outdoor Brands Corporation (NASDAQ:AOBC)
American Outdoor Brands Corporation designs, manufactures, and sells firearms worldwide. Formed in 1852, and currently run by P. Debney, the company provides employment to 2,192 people and with the stock’s market cap sitting at USD $598.14M, it comes under the small-cap stocks category.
AOBC’s stock is now trading at -24% under its intrinsic value of $14.88, at a price tag of US$11.32, according to my discounted cash flow model. This mismatch signals an opportunity to buy AOBC shares at a discount. Also, AOBC’s PE ratio is trading at around 15.3x compared to its Leisure peer level of, 23.16x implying that relative to other stocks in the industry, you can buy AOBC for a cheaper price. AOBC also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Interested in American Outdoor Brands? Find out more here.
Tarena International, Inc. (NASDAQ:TEDU)
Tarena International, Inc., through its subsidiaries, provides professional education services through part-time and full-time classes in the People’s Republic of China. Formed in 2002, and now led by CEO Shaoyun Han, the company provides employment to 6,257 people and with the company’s market capitalisation at USD $602.63M, we can put it in the small-cap group.
TEDU’s stock is currently trading at -44% less than its true value of ¥19.12, at a price tag of US$10.76, according to my discounted cash flow model. This mismatch signals an opportunity to buy TEDU shares at a discount. Moreover, TEDU’s PE ratio is currently around 20.77x compared to its Consumer Services peer level of, 22x indicating that relative to its peers, TEDU’s shares can be purchased for a lower price. TEDU is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. TEDU also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More detail on Tarena International here.
Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Bed Bath & Beyond Inc., together with its subsidiaries, operates a chain of retail stores. Formed in 1971, and now led by CEO Steven Temares, the company provides employment to 65,000 people and has a market cap of USD $2.46B, putting it in the mid-cap category.
BBBY’s shares are currently trading at -46% less than its true level of $33.86, at the market price of US$18.12, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. In terms of relative valuation, BBBY’s PE ratio is trading at around 5.94x compared to its Specialty Retail peer level of, 18.43x suggesting that relative to its competitors, BBBY’s shares can be purchased for a lower price. BBBY is also in great financial shape, as current assets can cover liabilities in the near term and over the long run.
More detail on Bed Bath & Beyond here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.