Best-In-Class ASX Undervalued Stocks
Recent undervalued companies based on their current market price include Huon Aquaculture Group and Westgold Resources. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
Huon Aquaculture Group Limited (ASX:HUO)
Huon Aquaculture Group Limited, together with its subsidiaries, hatches, farms, processes, markets, and sells Atlantic salmon and ocean trout in Australia. Started in 1986, and now led by CEO Peter Bender, the company employs 500 people and with the stock’s market cap sitting at AUD A$404.37M, it comes under the small-cap group.
HUO’s stock is currently hovering at around -40% below its intrinsic value of $7.66, at the market price of $4.63, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy HUO shares at a low price. Also, HUO’s PE ratio stands at around 9.6x against its its food peer level of 12.1x, implying that relative to its competitors, we can purchase HUO’s shares for cheaper. HUO is also a financially healthy company, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 23%, which has been falling for the past few years indicating HUO’s capability to reduce its debt obligations year on year.
Westgold Resources Limited (ASX:WGX)
Westgold Resources Limited engages in the exploration, development, mining, and treatment of gold assets in Western Australia. Established in 1987, and currently lead by Peter Cook, the company employs 371 people and has a market cap of AUD A$513.32M, putting it in the small-cap stocks category.
WGX’s stock is currently hovering at around -59% below its intrinsic level of $3.67, at a price of $1.52, based on my discounted cash flow model. This discrepancy gives us a chance to invest in WGX at a discount. In terms of relative valuation, WGX’s PE ratio is trading at around 29.4x while its metals and mining peer level trades at 15.3x, implying that relative to its peers, you can buy WGX for a cheaper price. WGX is also a financially healthy company, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to equity ratio of 3% has for the past few years signifying WGX’s capability
LandMark White Limited (ASX:LMW)
LandMark White Limited provides property valuation and consultancy services in Australia. Established in 1982, and currently headed by CEO Chris Coonan, the company provides employment to 250 people and has a market cap of AUD A$46.05M, putting it in the small-cap stocks category.
LMW’s shares are now trading at -53% beneath its actual level of $1.3, at the market price of $0.61, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Moreover, LMW’s PE ratio is currently around 12.2x relative to its real estate peer level of 14.7x, indicating that relative to its comparable set of companies, LMW’s shares can be purchased for a lower price. LMW is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. LMW also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility.
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.
