Industrial names generally suffer from deep cyclicality which can affect companies operating in areas ranging from machinery to aerospace to construction. Currently, PFB and Rocky Mountain Dealerships are industrial companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. Investors can benefit from buying these industrial companies while they are discounted, because they gain when the market prices move towards the stocks’ true values. Below is a list of stocks I’ve compiled that are deemed undervalued based on the latest financial data.
PFB Corporation (TSX:PFB)
PFB Corporation manufactures and markets insulating building products made from expanded polystyrene materials (EPS) for the residential and commercial construction markets in the North America. Established in 1968, and currently headed by CEO Robert Graham, the company employs 412 people and with the market cap of CAD CA$53.73M, it falls under the small-cap stocks category.
PFB’s shares are now trading at -45% lower than its intrinsic level of $14.43, at a price tag of CA$8.00, based on my discounted cash flow model. This discrepancy gives us a chance to invest in PFB at a discount. Moreover, PFB’s PE ratio is currently around 21.75x relative to its Building peer level of, 23.13x suggesting that relative to its comparable set of companies, you can buy PFB’s shares at a cheaper price. PFB is also in good financial health, as current assets can cover liabilities in the near term and over the long run.
Dig deeper into PFB here.
Rocky Mountain Dealerships Inc. (TSX:RME)
Rocky Mountain Dealerships Inc., through its subsidiaries, sells, leases, and provides support services for new and used agriculture and industrial equipment primarily in Canada and the United States. Established in 1949, and currently lead by Garrett Andrew Ganden, the company employs 840 people and with the market cap of CAD CA$223.94M, it falls under the small-cap group.
RME’s stock is currently trading at 14% less than its actual level of $9.91, at the market price of CA$11.26, based on my discounted cash flow model. This mismatch signals an opportunity to buy RME shares at a discount. Additionally, RME’s PE ratio is trading at around 10.56x relative to its Trade Distributors peer level of, 16.82x meaning that relative to its comparable set of companies, RME’s shares can be purchased for a lower price. RME is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 200.11% has been reducing for the past few years signalling its capacity to pay down its debt. Dig deeper into Rocky Mountain Dealerships here.
Exco Technologies Limited (TSX:XTC)
Exco Technologies Limited, together with its subsidiaries, designs, develops, manufactures, and sells dies, molds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Founded in 1952, and run by CEO Brian Robbins, the company now has 6,879 employees and with the market cap of CAD CA$407.96M, it falls under the small-cap category.
XTC’s shares are now floating at around -36% below its true value of $15.06, at the market price of CA$9.64, based on my discounted cash flow model. This discrepancy gives us a chance to invest in XTC at a discount. Furthermore, XTC’s PE ratio is around 10.8x relative to its Machinery peer level of, 26.82x indicating that relative to its peers, you can purchase XTC’s stock for a lower price right now. XTC is also a financially robust company, with current assets covering liabilities in the near term and over the long run.
Interested in Exco Technologies? Find out more 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.