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Best-In-Class Undervalued Stocks

Companies that trade at market prices below their actual values, such as NAHL Group and Mortice, are perceived to be undervalued. 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.

NAHL Group plc (AIM:NAH)

NAHL Group plc provides marketing services focusing on the legal services market in the United Kingdom. Established in 1993, and now led by CEO J. Atkinson, the company size now stands at 186 people and with the company’s market cap sitting at GBP £78.07M, it falls under the small-cap category.

NAH’s shares are now floating at around -52% under its intrinsic level of £3.49, at a price tag of £1.67, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. What’s even more appeal is that NAH’s PE ratio is currently around 7.3x relative to its media peer level of 23.8x, meaning that relative to its comparable set of companies, NAH can be bought at a cheaper price right now. NAH is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 18% has been dropping over the past couple of years signalling NAH’s capability to reduce its debt obligations year on year.

AIM:NAH PE PEG Gauge Dec 29th 17
AIM:NAH PE PEG Gauge Dec 29th 17

Mortice Limited (AIM:MORT)

Mortice Limited, together with its subsidiaries, provides security services in India and Sri Lanka. Mortice was started in 2008 and has a market cap of GBP £25.37M, putting it in the small-cap stocks category.

MORT’s shares are currently trading at -57% lower than its true value of $1.02, at a price tag of $0.45, based on my discounted cash flow model. This mismatch indicates a chance to invest in MORT at a discounted price. What’s even more appeal is that MORT’s PE ratio is trading at around 14.8x while its commercial services peer level trades at 13.6x, suggesting that relative to its comparable set of companies, MORT’s shares can be purchased for a lower price. MORT is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.

AIM:MORT PE PEG Gauge Dec 29th 17
AIM:MORT PE PEG Gauge Dec 29th 17

Provident Financial plc (LSE:PFG)

Provident Financial plc provides personal credit products to non-standard lending market in the United Kingdom, the Republic of Ireland, and Poland. Started in 1880, and currently headed by CEO , the company provides employment to 3,712 people and with the stock’s market cap sitting at GBP £1.34B, it comes under the small-cap stocks category.

PFG’s stock is currently floating at around -31% below its value of £13.34, at a price tag of £9.26, according to my discounted cash flow model. The mismatch signals a potential chance to invest in PFG at a discounted price. In terms of relative valuation, PFG’s PE ratio is trading at around 6.5x compared to its consumer finance peer level of 13.3x, indicating that relative to its peers, PFG’s shares can be purchased for a lower price. PFG is also in good financial health, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 264% has been dropping for the last couple of years signalling its capability to reduce its debt obligations year on year.

LSE:PFG PE PEG Gauge Dec 29th 17
LSE:PFG PE PEG Gauge Dec 29th 17

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.

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