Best Cheap Stocks To Buy
Companies with shares trading at a market price below what they are actually worth, such as Genworth Financial and Aetna, are deemed undervalued. 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.
Genworth Financial, Inc. (NYSE:GNW)
Genworth Financial, Inc. provides insurance and homeownership solutions in the United States and internationally. Formed in 2003, and run by CEO Thomas McInerney, the company size now stands at 3,500 people and has a market cap of USD $1.80B, putting it in the small-cap group.
GNW’s shares are now trading at -35% lower than its actual value of $5.88, at a price tag of US$3.82, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy GNW shares at a low price. Also, GNW’s PE ratio is trading at around 2.44x against its its Insurance peer level of, 14.28x suggesting that relative to its comparable set of companies, GNW’s stock can be bought at a cheaper price. GNW is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 34.01% has been declining for the past few years signalling its ability to pay down its debt. Dig deeper into Genworth Financial here.
Aetna Inc. (NYSE:AET)
Aetna Inc. operates as a health care benefits company in the United States. Established in 1853, and currently lead by Mark Bertolini, the company now has 47,950 employees and with the company’s market cap sitting at USD $57.46B, it falls under the large-cap category.
AET’s stock is now floating at around -41% under its actual worth of $302.63, at the market price of US$179.01, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy AET shares at a low price. Moreover, AET’s PE ratio stands at 16.86x relative to its Healthcare peer level of, 21.73x implying that relative to other stocks in the industry, AET can be bought at a cheaper price right now. AET 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. Finally, its debt relative to equity is 54.96%, which has been declining over the past couple of years signifying its capability to pay down its debt. More on Aetna here.
GlobalSCAPE, Inc. (AMEX:GSB)
GlobalSCAPE, Inc., together with its subsidiaries, develops and distributes software, delivers managed and hosted solutions, and provides associated services for secure information exchange, and file transfer and sharing for enterprises and consumers worldwide. Founded in 1996, and currently lead by Matthew Goulet, the company provides employment to 136 people and with the company’s market cap sitting at USD $84.13M, it falls under the small-cap category.
GSB’s shares are now hovering at around -45% less than its true level of $6.85, at a price tag of US$3.76, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. What’s even more appeal is that GSB’s PE ratio stands at 18.54x compared to its Software peer level of, 36.32x implying that relative to its competitors, GSB’s stock can be bought at a cheaper price. GSB is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. GSB has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on GlobalSCAPE 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.
