Cheap Stocks To Invest In
Companies that trade at market prices below their actual values, such as Journey Energy and King George Financial, 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.
Journey Energy Inc. (TSX:JOY)
Journey Energy Inc. engages in the exploration, development, and production of crude oil and natural gas in Canada. Established in 2007, and run by CEO Alexander Verge, the company employs 61 people and with the company’s market capitalisation at CAD CA$91.72M, we can put it in the small-cap group.
JOY’s stock is now floating at around -47% lower than its true level of $3.35, at the market price of $1.79, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that JOY’s PE ratio is currently around 1.5x compared to its oil, gas and consumable fuels peer level of 23.4x, implying that relative to its peers, you can purchase JOY’s stock for a lower price right now. JOY is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 37%, which has been declining over time, indicating JOY’s capability to pay down its debt.
King George Financial Corporation (TSXV:KGF)
King George Financial Corporation engages in commercial and residential real estate development activities in Canada. King George Financial was formed in 1999 and with the company’s market capitalisation at CAD CA$27.29M, we can put it in the small-cap category.
KGF’s shares are currently hovering at around -93% lower than its actual worth of $9.89, at a price tag of $0.69, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. In addition to this, KGF’s PE ratio is trading at 2.7x while its real estate management and development peer level trades at 13.3x, implying that relative to its comparable company group, KGF’s stock can be bought at a cheaper price. KGF is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 6% has over time, signifying KGF’s ability
Supremex Inc. (TSX:SXP)
Supremex Inc. manufactures and sells envelopes, and packaging and specialty products in North America. Started in 1977, and currently lead by Stewart Emerson, the company currently employs 845 people and with the company’s market capitalisation at CAD CA$124.13M, we can put it in the small-cap category.
SXP’s shares are currently floating at around -33% less than its actual level of $6.48, at the market price of $4.37, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. In terms of relative valuation, SXP’s PE ratio is trading at 8.4x relative to its paper and forest products peer level of 13.2x, suggesting that relative to its comparable company group, you can buy SXP for a cheaper price. SXP is also in good financial health, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 54% has been falling over the past couple of years showing SXP’s capability to pay down its debt.
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.
