January Top Undervalued Stock
Gold Road Resources and Netwealth Group 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. 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.
Gold Road Resources Limited (ASX:GOR)
Gold Road Resources Limited, together with its subsidiaries, engages in the exploration and development of mineral properties in Australia. Started in 2007, and now led by CEO Ian Murray, the company provides employment to 28 people and has a market cap of AUD A$701.67M, putting it in the small-cap group.
GOR’s stock is currently hovering at around -70% under its true level of $2.65, at the market price of $0.8, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Additionally, GOR’s PE ratio stands at 3x relative to its metals and mining peer level of 14.7x, indicating that relative to other stocks in the industry, we can buy GOR’s stock at a cheaper price today. GOR is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. GOR also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in Gold Road Resources? Find out more here.
Netwealth Group Limited (ASX:NWL)
Netwealth Group Limited operates in the wealth management industry in Australia. Netwealth Group was started in 1999 and with the stock’s market cap sitting at AUD A$1.54B, it comes under the small-cap category.
NWL’s stock is now trading at -28% under its actual worth of $8.91, at a price of $6.42, according to my discounted cash flow model. The divergence signals an opportunity to buy NWL shares at a low price. Moreover, NWL’s PE ratio is around 12.3x against its its capital markets peer level of 23.4x, implying that relative to its comparable set of companies, we can buy NWL’s stock at a cheaper price today. NWL is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities. NWL has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on Netwealth Group here.
OZ Minerals Limited (ASX:OZL)
OZ Minerals Limited, through its subsidiaries, explores and develops mining projects in Australia. The company currently employs 1302 people and with the market cap of AUD A$2.71B, it falls under the mid-cap stocks category.
OZL’s shares are now hovering at around -53% less than its actual level of $19.25, at a price tag of $9.08, based on my discounted cash flow model. The divergence signals an opportunity to buy OZL shares at a low price. What’s even more appeal is that OZL’s PE ratio stands at around 17.1x relative to its index peer level of 18x, suggesting that relative to other stocks in the industry, we can purchase OZL’s shares for cheaper. OZL is also in good financial health, as current assets can cover liabilities in the near term and over the long run. OZL has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into OZ Minerals 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.
