Stocks, such as ScanSource and Cooper Tire & Rubber, are trading at a value below what they may actually be worth. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
ScanSource, Inc. (NASDAQ:SCSC)
ScanSource, Inc. distributes technology products and solutions in North America, Latin America, and Europe. Founded in 1992, and now run by Michael Baur, the company size now stands at 2,000 people and with the company’s market capitalisation at USD $903.95M, we can put it in the small-cap stocks category.
SCSC’s shares are currently floating at around -22% less than its intrinsic value of $44.53, at a price of US$34.70, according to my discounted cash flow model. This mismatch signals an opportunity to buy SCSC shares at a discount. Moreover, SCSC’s PE ratio is around 20.25x compared to its Electronic peer level of, 21.05x implying that relative to other stocks in the industry, SCSC’s shares can be purchased for a lower price. SCSC also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run.
More detail on ScanSource here.
Cooper Tire & Rubber Company (NYSE:CTB)
Cooper Tire & Rubber Company, together with its subsidiaries, designs, manufactures, and markets replacement tires in North America, Latin America, Europe, and Asia. Founded in 1913, and currently lead by Bradley Hughes, the company size now stands at 9,204 people and with the company’s market cap sitting at USD $1.39B, it falls under the small-cap category.
CTB’s shares are currently trading at -21% under its value of $34.16, at a price of US$27.10, based on its expected future cash flows. The divergence signals an opportunity to buy CTB shares at a low price. Also, CTB’s PE ratio is trading at 14.83x relative to its index peer level of, 18.16x indicating that relative to its competitors, we can purchase CTB’s shares for cheaper. CTB is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 28.41% has been diminishing over time, signifying its capability to pay down its debt. Interested in Cooper Tire & Rubber? Find out more here.
Park-Ohio Holdings Corp. (NASDAQ:PKOH)
Park-Ohio Holdings Corp., through its subsidiaries, provides supply chain management outsourcing services, capital equipment, and manufactured components in the United States, Asia, Europe, Canada, Mexico, and internationally. Started in 1961, and run by CEO Edward Crawford, the company currently employs 6,100 people and has a market cap of USD $460.81M, putting it in the small-cap group.
PKOH’s shares are now floating at around -13% under its intrinsic value of $43.14, at a price of US$37.55, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Additionally, PKOH’s PE ratio is currently around 16.03x against its its Machinery peer level of, 24.07x suggesting that relative to other stocks in the industry, we can invest in PKOH at a lower price. PKOH also has a healthy balance sheet, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 185.14% has been reducing for the last couple of years revealing PKOH’s ability to pay down its debt. Dig deeper into Park-Ohio Holdings 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.