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Best-In-Class Undervalued Stocks

Joel Foster

Undervalued companies, such as Fufeng Group and Texhong Textile Group, trade at a price less than their true values. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.

Fufeng Group Limited (SEHK:546)

Fufeng Group Limited, an investment holding company, engages in the manufacture and sale of fermentation-based food additive, and biochemical and starch-based products in the People’s Republic of China. Established in 1999, and now run by Qiang Zhao, the company currently employs 7,500 people and with the market cap of HKD HK$12.81B, it falls under the large-cap stocks category.

546’s stock is now floating at around -41% beneath its actual level of ¥8.46, at the market price of HK$5.03, based on its expected future cash flows. This discrepancy gives us a chance to invest in 546 at a discount. Additionally, 546’s PE ratio is trading at around 6.49x against its its Chemicals peer level of, 11.28x suggesting that relative to its comparable company group, we can purchase 546’s shares for cheaper. 546 is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 28.54% has been falling for the past few years signifying its capacity to reduce its debt obligations year on year. Interested in Fufeng Group? Find out more here.

SEHK:546 PE PEG Gauge Mar 20th 18

Texhong Textile Group Limited (SEHK:2678)

Texhong Textile Group Limited, an investment holding company, primarily manufactures and sells yarns, grey fabrics, and garment fabrics. Founded in 1997, and currently lead by Yongxiang Zhu, the company now has 38,024 employees and has a market cap of HKD HK$9.94B, putting it in the mid-cap category.

2678’s stock is now floating at around -61% beneath its actual value of ¥27.7, at a price tag of HK$10.86, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy 2678 shares at a discount. Additionally, 2678’s PE ratio is currently around 6.96x against its its Luxury peer level of, 14.59x suggesting that relative to its comparable set of companies, we can purchase 2678’s shares for cheaper. 2678 is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.

Continue research on Texhong Textile Group here.

SEHK:2678 PE PEG Gauge Mar 20th 18

Wheelock and Company Limited (SEHK:20)

Wheelock and Company Limited (HKSE: 00020) is a listed property group headquartered in Hong Kong. Established in 1857, and now led by CEO Woo Kuen, the company employs 12,600 people and with the stock’s market cap sitting at HKD HK$121.89B, it comes under the large-cap stocks category.

20’s shares are currently hovering at around -42% lower than its actual level of $102.17, at a price of HK$59.70, according to my discounted cash flow model. This mismatch indicates a chance to invest in 20 at a discounted price. Moreover, 20’s PE ratio stands at around 5.92x relative to its Real Estate peer level of, 8.25x indicating that relative to its competitors, you can buy 20 for a cheaper price. 20 also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run. Finally, its debt relative to equity is 29.65%, which has been diminishing over the past couple of years signifying its capability to pay down its debt. Interested in Wheelock? Find out more here.

SEHK:20 PE PEG Gauge Mar 20th 18

Or create your own list by filtering SEHK companies based on fundamentals such as intrinsic discount, health score and future outlook using this free stock screener.

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.