General American Investors Company and Resource Capital are companies that are currently trading below what they’re actually worth. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
General American Investors Company, Inc. (NYSE:GAM)
General American Investors Company, Inc. is a publicly owned investment manager. General American Investors Company was established in 1927 and with the company’s market capitalisation at USD $886.51M, we can put it in the small-cap group.
GAM’s stock is now hovering at around -36% under its actual level of $52.87, at a price tag of US$33.85, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Additionally, GAM’s PE ratio stands at 5.62x against its its Capital Markets peer level of, 16.76x implying that relative to other stocks in the industry, we can invest in GAM at a lower price. GAM is also in good financial health, with near-term assets able to cover upcoming and long-term liabilities. GAM has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into General American Investors Company here.
Resource Capital Corp. (NYSE:RSO)
Resource Capital Corp., a real estate investment trust, primarily focuses on the origination, holding, and management of commercial mortgage loans and commercial real estate-related debt investments in the United States. Started in 2005, and currently run by Robert Lieber, the company provides employment to 83 people and has a market cap of USD $294.61M, putting it in the small-cap group.
RSO’s stock is now trading at -40% less than its actual level of $15.97, at a price tag of US$9.52, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. In terms of relative valuation, RSO’s PE ratio is around 14.83x relative to its index peer level of, 18.22x indicating that relative to other stocks in the industry, we can buy RSO’s stock at a cheaper price today. RSO is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 173.28% has been declining for the past few years signifying its capacity to reduce its debt obligations year on year. More detail on Resource Capital here.
Spark Energy, Inc. (NASDAQ:SPKE)
Spark Energy, Inc., through its subsidiaries, operates as an independent retail energy services company in the United States. Started in 1999, and now run by Nathan Kroeker, the company now has 176 employees and with the market cap of USD $386.05M, it falls under the small-cap group.
SPKE’s stock is now floating at around -62% under its true level of $29.13, at a price tag of US$11.15, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. Moreover, SPKE’s PE ratio is trading at 9.27x compared to its Electric Utilities peer level of, 14.17x implying that relative to its competitors, you can purchase SPKE’s stock for a lower price right now. SPKE is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Interested in Spark Energy? Find out more 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.