Stocks, such as Appliance Recycling Centers of America, trading at a market price below their true values are considered to be undervalued. Investors can profit from the difference by investing in these stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI)
Appliance Recycling Centers of America, Inc., together with its subsidiaries, sells and recycles household appliances through a chain of company-owned retail stores under the ApplianceSmart name. Started in 1976, and run by CEO Tony Isaac, the company size now stands at 441 people and has a market cap of USD $5.64M, putting it in the small-cap category.
ARCI’s stock is currently floating at around -32% beneath its intrinsic level of $1.21, at the market price of US$0.82, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Also, ARCI’s PE ratio is trading at around 1.08x while its Specialty Retail peer level trades at, 19.25x meaning that relative to its competitors, you can buy ARCI for a cheaper price. ARCI 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 15.07% has been declining for the past few years signifying its capability to pay down its debt. Dig deeper into Appliance Recycling Centers of America here.
Tyson Foods, Inc. (NYSE:TSN)
Tyson Foods, Inc., together with its subsidiaries, operates as a food company worldwide. Started in 1935, and currently headed by CEO Thomas Hayes, the company employs 122,000 people and with the stock’s market cap sitting at USD $25.09B, it comes under the large-cap group.
TSN’s shares are currently hovering at around -36% lower than its actual level of $106.67, at the market price of US$68.25, based on my discounted cash flow model. This discrepancy gives us a chance to invest in TSN at a discount. Moreover, TSN’s PE ratio is trading at 8.96x relative to its Food peer level of, 18.45x indicating that relative to its comparable set of companies, you can purchase TSN’s stock for a lower price right now. TSN is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run.
More on Tyson Foods here.
Federated Investors, Inc. (NYSE:FII)
Federated Investors, Inc. is a publicly owned asset management holding company. Started in 1955, and currently run by John Donahue, the company now has 1,441 employees and with the company’s market capitalisation at USD $2.49B, we can put it in the mid-cap stocks category.
FII’s shares are currently hovering at around -41% beneath its true level of $41.61, at a price of US$24.53, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. What’s even more appeal is that FII’s PE ratio is trading at around 8.22x against its its Capital Markets peer level of, 16.41x implying that relative to its comparable company group, you can purchase FII’s stock for a lower price right now. FII is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 19.92% has been diminishing over time, revealing FII’s capacity to pay down its debt. More on Federated Investors 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.