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Best-In-Class Undervalued Stocks

Bernadette Hatcher

Stocks, such as SandRidge Mississippian Trust I and Hudson Technologies, are trading at a value below what they may actually be worth. There’s a few ways you can determine how much a company is actually worth. 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. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.

SandRidge Mississippian Trust I (NYSE:SDT)

SandRidge Mississippian Trust I, a statutory trust, holds royalty interests in specified oil and natural gas properties located in the Mississippian formation in Alfalfa, Garfield, Grant, and Woods counties in Oklahoma. The company was established in 2010 and with the company’s market capitalisation at USD $33.60M, we can put it in the small-cap group.

SDT’s shares are now floating at around -55% below its intrinsic level of $2.6, at the market price of $1.18, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Also, SDT’s PE ratio stands at around 5.2x compared to its oil, gas and consumable fuels peer level of 20x, indicating that relative to other stocks in the industry, SDT’s stock can be bought at a cheaper price. SDT is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run. SDT also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.

NYSE:SDT PE PEG Gauge Nov 16th 17

Hudson Technologies Inc. (NASDAQ:HDSN)

Hudson Technologies Inc. operates as a refrigerant services company in the United States and internationally. Established in 1991, and currently lead by Kevin Zugibe, the company provides employment to 137 people and with the stock’s market cap sitting at USD $259.80M, it comes under the small-cap category.

HDSN’s stock is now hovering at around -30% less than its actual value of $8.37, at a price tag of $5.86, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Additionally, HDSN’s PE ratio is trading at around 16.4x against its its commercial services and supplies peer level of 24.3x, implying that relative to its peers, you can purchase HDSN’s stock for a lower price right now. HDSN is also a financially robust company, with current assets covering liabilities in the near term and over the long run. HDSN also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility.

NasdaqCM:HDSN PE PEG Gauge Nov 16th 17

Forward Pharma A/S (NASDAQ:FWP)

Forward Pharma A/S operates as a biopharmaceutical company. Established in 2005, and now led by CEO Claus Svendsen, the company now has 13 employees and with the company’s market cap sitting at USD $214.69M, it falls under the small-cap group.

FWP’s stock is currently hovering at around -43% beneath its actual worth of $7.9, at the market price of $4.48, according to my discounted cash flow model. This mismatch signals an opportunity to buy FWP shares at a discount. What’s even more appeal is that FWP’s PE ratio is trading at 0.2x compared to its biotechnology peer level of 26.9x, implying that relative to its comparable set of companies, FWP’s shares can be purchased for a lower price. FWP is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. FWP also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.

NasdaqGS:FWP PE PEG Gauge Nov 16th 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.