Biostar Pharmaceuticals and Goodrich Petroleum are two of the stocks I have identified as undervalued. This means their current share prices are trading at levels less than what the companies are actually worth. 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.
Biostar Pharmaceuticals, Inc. (NASDAQ:BSPM)
Biostar Pharmaceuticals, Inc. develops, manufactures, and markets over-the-counter (OTC) and prescription pharmaceutical products for various diseases and conditions in the People’s Republic of China. Started in 2007, and now led by CEO Ronghua Wang, the company currently employs 200 people and with the stock’s market cap sitting at USD $5.06M, it comes under the small-cap category.
BSPM’s shares are currently trading at -90% less than its true level of $18.29, at the market price of $1.82, based on my discounted cash flow model. This mismatch signals an opportunity to buy BSPM shares at a discount. In addition to this, BSPM’s PE ratio is currently around 5.1x against its its pharmaceuticals peer level of 24x, indicating that relative to its peers, we can buy BSPM’s stock at a cheaper price today. BSPM is also in great financial shape, as short-term assets amply cover upcoming and long-term liabilities.
Goodrich Petroleum Corporation (AMEX:GDP)
Goodrich Petroleum Corporation, an independent oil and natural gas company, engages in the exploration, development, and production of oil and natural gas. Formed in 1995, and currently lead by Walter Goodrich, the company currently employs 47 people and with the stock’s market cap sitting at USD $114.76M, it comes under the small-cap category.
GDP’s stock is now hovering at around -82% below its true level of $59.64, at a price of $10.87, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy GDP shares at a low price. Also, GDP’s PE ratio is around 3x relative to its oil and gas peer level of 14.9x, suggesting that relative to its comparable set of companies, GDP can be bought at a cheaper price right now. GDP also has a healthy balance sheet, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 93%, which has been dropping for the past few years signifying GDP’s ability to reduce its debt obligations year on year.
Oracle Healthcare Acquisition Corp. (OTCPK:OHAQ)
Oracle Healthcare Acquisition Corp. does not have significant operations. Oracle Healthcare Acquisition was established in 2005 and with the company’s market cap sitting at USD $18.75K, it falls under the small-cap category.
OHAQ’s shares are currently trading at -100% less than its real value of $4.76, at the market price of $0, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy OHAQ shares at a low price. In terms of relative valuation, OHAQ’s PE ratio stands at 0x against its its capital markets peer level of 16.5x, suggesting that relative to its peers, you can buy OHAQ for a cheaper price. OHAQ is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. OHAQ also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.
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.