Undervalued companies are those that trade at a price lower than their actual values, such as MotorCycle Holdings and Centuria Metropolitan REIT. 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.
MotorCycle Holdings Limited (ASX:MTO)
MotorCycle Holdings Limited operates as a motorcycle dealer in Australia. Established in 1989, and currently run by David Ahmet, the company employs 450 people and with the company’s market cap sitting at AUD A$191.29M, it falls under the small-cap category.
MTO’s shares are now hovering at around -39% lower than its intrinsic level of $5.06, at the market price of AU$3.10, based on its expected future cash flows. This discrepancy gives us a chance to invest in MTO at a discount. Moreover, MTO’s PE ratio is trading at 16.18x relative to its index peer level of, 17.26x indicating that relative to other stocks in the industry, you can buy MTO’s shares at a cheaper price. MTO is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run.
Continue research on MotorCycle Holdings here.
Centuria Metropolitan REIT (ASX:CMA)
Centuria Property Funds Limited (CPFL), a wholly-owned subsidiary of Centuria Capital Group (CNI), is the Responsible Entity for the ASX listed Centuria Metropolitan REIT (CMA). The company was established in 2014 and has a market cap of AUD A$572.99M, putting it in the small-cap category.
CMA’s shares are currently trading at -36% below its value of $3.69, at the market price of AU$2.36, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Also, CMA’s PE ratio stands at 7.5x relative to its REITs peer level of, 8.93x meaning that relative to its peers, CMA’s shares can be purchased for a lower price. CMA also has a healthy balance sheet, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 50.60%, which has been reducing over the past couple of years signalling its capability to pay down its debt. Interested in Centuria Metropolitan REIT? Find out more here.
Vicinity Centres (ASX:VCX)
Vicinity Centres (Vicinity or the Group) is one of Australia’s leading retail property groups with a fully integrated asset management platform, and $26 billion in retail assets under management across 83 shopping centres, making it the second largest listed manager of Australian retail property. The company employs 800 people and with the stock’s market cap sitting at AUD A$9.83B, it comes under the mid-cap stocks category.
VCX’s stock is now hovering at around -31% beneath its actual worth of $3.71, at a price tag of AU$2.54, according to my discounted cash flow model. The divergence signals an opportunity to buy VCX shares at a low price. In terms of relative valuation, VCX’s PE ratio is currently around 6.99x while its REITs peer level trades at, 8.93x suggesting that relative to its comparable set of companies, we can invest in VCX at a lower price. VCX is also strong in terms of its financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 39.52% has been reducing over the past couple of years showing its capacity to reduce its debt obligations year on year. More on Vicinity Centres 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.