Cheap Stocks To Watch Out For In April
Companies that are recently trading at a market price lower than their real values include DFS Furniture and Moss Bros Group. 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.
DFS Furniture plc (LSE:DFS)
DFS Furniture plc designs, manufactures, sells, delivers, installs, and retails a range of sofas, upholstered furniture, and other living room furniture products. Founded in 1969, and run by CEO Ian Filby, the company size now stands at 5,000 people and with the stock’s market cap sitting at GBP £485.76M, it comes under the small-cap stocks category.
DFS’s stock is now floating at around -43% beneath its true value of £4, at a price of UK£2.30, according to my discounted cash flow model. This discrepancy gives us a chance to invest in DFS at a discount. Also, DFS’s PE ratio is currently around 15.22x while its index peer level trades at, 16.88x meaning that relative to its comparable company group, you can purchase DFS’s stock for a lower price right now. DFS also has a healthy balance sheet, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 80.68% has been reducing over the past couple of years showing DFS’s capacity to pay down its debt. More on DFS Furniture here.
Moss Bros Group plc (LSE:MOSB)
Moss Bros Group PLC, together with its subsidiaries, retails and hires formal wear for men primarily in the United Kingdom. Started in 1851, and run by CEO Brian Brick, the company currently employs 956 people and with the stock’s market cap sitting at GBP £51.25M, it comes under the small-cap stocks category.
MOSB’s stock is now floating at around -37% below its intrinsic value of £0.81, at a price of UK£0.51, based on its expected future cash flows. signalling an opportunity to buy the stock at a low price. In addition to this, MOSB’s PE ratio is trading at around 9.57x compared to its Specialty Retail peer level of, 13.75x suggesting that relative to its comparable set of companies, we can invest in MOSB at a lower price. MOSB is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities. MOSB has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into Moss Bros Group here.
Prime People Plc (AIM:PRP)
Prime People Plc, together with its subsidiaries, provides permanent and contract recruitment services in the United Kingdom, the Middle East, Asia, and Africa. The company now has 128 employees and with the company’s market capitalisation at GBP £9.49M, we can put it in the small-cap category.
PRP’s shares are now hovering at around -77% lower than its true value of £3.49, at a price of UK£0.81, based on its expected future cash flows. The mismatch signals a potential chance to invest in PRP at a discounted price. Also, PRP’s PE ratio is currently around 6.51x against its its Professional Services peer level of, 17.02x suggesting that relative to its peers, you can buy PRP’s shares at a cheaper price. PRP is also strong in terms of its financial health, with short-term assets covering liabilities in the near future as well as in the long run. PRP also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on Prime People 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.
