Ichor Holdings and Fabrinet are stocks on my list that are potentially undervalued. This means their current share prices are trading well-below what the companies are actually worth. 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.
Ichor Holdings, Ltd. (NASDAQ:ICHR)
Ichor Holdings, Ltd. engages in the design, engineering, and manufacture of fluid delivery subsystems for semiconductor capital equipment in the United States, the United Kingdom, Singapore, and Malaysia. Started in 1999, and headed by CEO Thomas Rohrs, the company now has 587 employees and has a market cap of USD $660.45M, putting it in the small-cap stocks category.
ICHR’s shares are now trading at -41% lower than its value of $46.65, at the market price of $27.5, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy ICHR shares at a low price. What’s even more appeal is that ICHR’s PE ratio is currently around 14.1x relative to its semiconductor peer level of 20.3x, meaning that relative to its comparable company group, ICHR’s shares can be purchased for a lower price. ICHR is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run.
Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, medical devices, and sensors. Established in 1999, and currently headed by CEO Seamus Grady, the company now has 10,541 employees and with the stock’s market cap sitting at USD $1.10B, it comes under the small-cap group.
FN’s shares are now hovering at around -30% below its actual value of $41.91, at a price of $29.37, based on my discounted cash flow model. This mismatch indicates a chance to invest in FN at a discounted price. In addition to this, FN’s PE ratio stands at 11.5x compared to its electronic peer level of 23.3x, implying that relative to other stocks in the industry, FN can be bought at a cheaper price right now. FN is also in great financial shape, with current assets covering liabilities in the near term and over the long run. Finally, its debt relative to equity is 10%, which has been reducing for the last couple of years showing its ability to pay down its debt.
TTM Technologies, Inc. (NASDAQ:TTMI)
TTM Technologies, Inc., together with its subsidiaries, manufactures printed circuit boards (PCBs) worldwide. Started in 1978, and currently run by Thomas Edman, the company now has 28,360 employees and with the stock’s market cap sitting at USD $1.63B, it comes under the small-cap group.
TTMI’s shares are now trading at -49% lower than its intrinsic level of $32.2, at a price tag of $16.32, based on my discounted cash flow model. The mismatch signals a potential chance to invest in TTMI at a discounted price. In addition to this, TTMI’s PE ratio is around 22.6x relative to its electronic peer level of 23.3x, suggesting that relative to other stocks in the industry, we can buy TTMI’s stock at a cheaper price today. TTMI is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run.
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.