Companies that are recently trading at a market price lower than their real values include Linamar and Gran Colombia Gold. 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.
Linamar Corporation (TSX:LNR)
Linamar Corporation manufactures and sells precision metallic components, modules, and systems in Canada, the United States, the Asia Pacific, Mexico, and Europe. Established in 1966, and run by CEO Linda Hasenfratz, the company now has 28,700 employees and with the company’s market capitalisation at CAD CA$4.25B, we can put it in the mid-cap group.
LNR’s stock is currently hovering at around -16% below its intrinsic value of $77.43, at a price tag of CA$65.08, according to my discounted cash flow model. This mismatch indicates a chance to invest in LNR at a discounted price. In terms of relative valuation, LNR’s PE ratio stands at 7.57x relative to its Auto Components peer level of, 17.72x meaning that relative to other stocks in the industry, we can buy LNR’s stock at a cheaper price today. LNR is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities.
Interested in Linamar? Find out more here.
Gran Colombia Gold Corp. (TSX:GCM)
Gran Colombia Gold Corp., together with its subsidiaries, engages in the acquisition, exploration, development, and operation of gold and silver properties primarily in Colombia. The company size now stands at 2831 people and with the market cap of CAD CA$97.19M, it falls under the small-cap group.
GCM’s stock is currently floating at around -29% lower than its true value of $4.51, at a price tag of CA$3.19, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that GCM’s PE ratio stands at around 1.19x against its its Metals and Mining peer level of, 11.91x indicating that relative to other stocks in the industry, GCM’s stock can be bought at a cheaper price. GCM is also in good financial health, with near-term assets able to cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 39.56% has been reducing for the last couple of years indicating its capacity to pay down its debt. Continue research on Gran Colombia Gold here.
Cipher Pharmaceuticals Inc. (TSX:CPH)
Cipher Pharmaceuticals Inc., together with its subsidiaries, operates as a specialty pharmaceutical company in Canada. Established in 2004, and headed by CEO Robert Tessarolo, the company currently employs 26 people and with the market cap of CAD CA$76.69M, it falls under the small-cap group.
CPH’s stock is now trading at -54% beneath its true level of $6.25, at the market price of CA$2.87, based on its expected future cash flows. The mismatch signals a potential chance to invest in CPH at a discounted price. Furthermore, CPH’s PE ratio is trading at 5.18x against its its Pharmaceuticals peer level of, 51.34x indicating that relative to its competitors, we can invest in CPH at a lower price. CPH is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run.
Continue research on Cipher Pharmaceuticals 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.