Recent undervalued companies based on their current market price include Kip McGrath Education Centres and Fortescue Metals Group. Investors can benefit from buying these companies while they are discounted, because they gain when the market prices move towards the stocks’ true values. Below is a list of stocks I’ve compiled that are deemed undervalued based on the latest financial data.
Kip McGrath Education Centres Limited (ASX:KME)
Kip McGrath Education Centres Limited provides supplementary English and maths education services in Australasia, the United Kingdom, Europe, and internationally. Kip McGrath Education Centres was formed in 1974 and with the stock’s market cap sitting at AUD A$22.52M, it comes under the small-cap stocks category.
KME’s shares are currently hovering at around -35% lower than its actual value of $0.77, at a price tag of $0.5, according to my discounted cash flow model. This discrepancy gives us a chance to invest in KME at a discount. In terms of relative valuation, KME’s PE ratio stands at around 15.6x against its its diversified consumer services peer level of 21.5x, meaning that relative to other stocks in the industry, you can buy KME’s shares at a cheaper price. KME is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 7% has been declining for the last couple of years showing its capability to reduce its debt obligations year on year.
Fortescue Metals Group Limited (ASX:FMG)
Fortescue Metals Group Limited engages in the exploration, development, production, processing, and sale of iron ore in Australia, China, and internationally. Established in 2003, and currently run by Neville Power, the company provides employment to 3,890 people and with the company’s market cap sitting at AUD A$14.44B, it falls under the large-cap group.
FMG’s shares are currently hovering at around -37% lower than its actual value of $7.42, at the market price of $4.64, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Moreover, FMG’s PE ratio stands at around 5.3x against its its metals and mining peer level of 13.8x, suggesting that relative to other stocks in the industry, FMG’s shares can be purchased for a lower price. FMG is also strong in terms of its financial health, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 46% has been dropping for the last couple of years demonstrating FMG’s ability to pay down its debt.
Aveo Group (ASX:AOG)
Aveo Group invests in, develops, and manages retirement villages in Australia. Aveo Group was founded in 1991 and with the company’s market cap sitting at AUD A$1.51B, it falls under the small-cap stocks category.
AOG’s shares are now hovering at around -36% below its true value of $4.1, at a price of $2.62, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy AOG shares at a discount. Also, AOG’s PE ratio is trading at around 5.9x against its its real estate management and development peer level of 12.3x, suggesting that relative to other stocks in the industry, we can buy AOG’s stock at a cheaper price today. AOG is also a financially healthy company, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 29% has been falling over the past couple of years signifying its capability to reduce its debt obligations year on year.
For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our 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.