Companies, such as United Rentals, are deemed to be undervalued because their shares are currently trading below their true values. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
United Rentals, Inc. (NYSE:URI)
United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. Established in 1997, and currently lead by Michael Kneeland, the company employs 14,800 people and with the stock’s market cap sitting at USD $15.12B, it comes under the large-cap category.
URI’s stock is currently floating at around -42% under its true value of $310.6, at a price tag of US$180.63, based on my discounted cash flow model. This mismatch signals an opportunity to buy URI shares at a discount. Furthermore, URI’s PE ratio is trading at 11.35x relative to its Trade Distributors peer level of, 16.02x suggesting that relative to other stocks in the industry, URI can be bought at a cheaper price right now. URI also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 303.93%, which has been declining over the past couple of years revealing its ability to reduce its debt obligations year on year. Dig deeper into United Rentals here.
Hooker Furniture Corporation (NASDAQ:HOFT)
Hooker Furniture Corporation, together with its subsidiaries, operates as a home furnishings marketing, design, and logistics company worldwide. Established in 1924, and currently run by Paul Toms, the company size now stands at 952 people and with the stock’s market cap sitting at USD $461.03M, it comes under the small-cap category.
HOFT’s stock is now hovering at around -28% less than its actual level of $53.38, at a price of US$38.70, based on its expected future cash flows. This mismatch indicates a chance to invest in HOFT at a discounted price. Moreover, HOFT’s PE ratio stands at around 14.63x relative to its Consumer Durables peer level of, 17.19x meaning that relative to its competitors, we can invest in HOFT at a lower price. HOFT is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities.
Continue research on Hooker Furniture here.
Ameriprise Financial, Inc. (NYSE:AMP)
Ameriprise Financial, Inc., through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. Established in 1894, and currently lead by James Cracchiolo, the company provides employment to 13,000 people and with the market cap of USD $23.45B, it falls under the large-cap category.
AMP’s stock is currently floating at around -28% less than its value of $224.46, at the market price of US$162.32, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy AMP shares at a discount. In addition to this, AMP’s PE ratio is trading at 16.9x relative to its Capital Markets peer level of, 16.94x implying that relative to other stocks in the industry, you can purchase AMP’s stock for a lower price right now. AMP is also strong financially, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 88.35% has been diminishing for the last couple of years signifying AMP’s capacity to reduce its debt obligations year on year. Continue research on Ameriprise Financial here.
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.