Stocks, such as LCI Industries, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
LCI Industries (NYSE:LCII)
LCI Industries, along with its subsidiaries, manufactures and supplies components for the manufacturers of recreational vehicles (RVs) and adjacent industries in the United States and internationally. Founded in 1962, and currently run by Jason Lippert, the company now has 9,852 employees and has a market cap of USD $2.50B, putting it in the mid-cap category.
LCII’s stock is now floating at around -47% under its intrinsic level of $181.53, at the market price of US$97.05, based on my discounted cash flow model. This mismatch signals an opportunity to buy LCII shares at a discount. What’s even more appeal is that LCII’s PE ratio is currently around 18.27x relative to its index peer level of, 18.33x meaning that relative to other stocks in the industry, you can buy LCII for a cheaper price. LCII is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities.
Continue research on LCI Industries here.
Avadel Pharmaceuticals plc (NASDAQ:AVDL)
Avadel Pharmaceuticals plc develops and commercializes pharmaceutical products primarily for treating urology and sleep medicines in the United States, France, and Ireland. Formed in 1990, and currently headed by CEO Michael Anderson, the company employs 175 people and has a market cap of USD $283.50M, putting it in the small-cap category.
AVDL’s shares are currently trading at -50% below its actual value of $15.47, at a price tag of US$7.78, according to my discounted cash flow model. The divergence signals an opportunity to buy AVDL shares at a low price. Also, AVDL’s PE ratio is trading at 4.61x while its Pharmaceuticals peer level trades at, 23.5x implying that relative to other stocks in the industry, you can purchase AVDL’s stock for a lower price right now. AVDL is also in great financial shape, with current assets covering liabilities in the near term and over the long run. AVDL also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. Dig deeper into Avadel Pharmaceuticals here.
Euro Tech Holdings Company Limited (NASDAQ:CLWT)
Euro Tech Holdings Company Limited distributes water treatment equipment, laboratory instruments, analyzers, test kits and related supplies, and power generation equipment in Hong Kong and the People’s Republic of China. Started in 1971, and headed by CEO T. Leung, the company currently employs 119 people and with the stock’s market cap sitting at USD $4.43M, it comes under the small-cap stocks category.
CLWT’s shares are currently trading at -56% less than its value of $5.34, at a price of US$2.35, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that CLWT’s PE ratio stands at around 7.78x relative to its Trade Distributors peer level of, 13.4x implying that relative to its competitors, you can purchase CLWT’s stock for a lower price right now. CLWT is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Dig deeper into Euro Tech Holdings 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.