Psychemedics and Owens & Minor are utilities stocks on my list that are potentially undervalued. This means their current share prices are trading well-below what the companies are actually worth. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Psychemedics Corporation (NASDAQ:PMD)
Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States and internationally. Founded in 1985, and headed by CEO Raymond Kubacki, the company currently employs 206 people and with the company’s market cap sitting at USD $119.62M, it falls under the small-cap stocks category.
PMD’s stock is currently hovering at around -52% lower than its actual worth of $41.67, at the market price of US$19.91, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy PMD shares at a discount. What’s even more appeal is that PMD’s PE ratio is trading at 18.1x while its Healthcare peer level trades at, 20.34x suggesting that relative to its comparable set of companies, we can purchase PMD’s shares for cheaper. PMD is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
More detail on Psychemedics here.
Owens & Minor, Inc. (NYSE:OMI)
Owens & Minor, Inc., together with its subsidiaries, operates as a healthcare services company in the United States, the United Kingdom, Ireland, France, Germany, and other European countries. Founded in 1882, and headed by CEO Paul Phipps, the company now has 8,600 employees and with the market cap of USD $1.05B, it falls under the small-cap category.
OMI’s stock is currently trading at -39% less than its actual worth of $27.45, at a price tag of US$16.81, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In terms of relative valuation, OMI’s PE ratio is currently around 14.06x relative to its Healthcare peer level of, 20.34x suggesting that relative to other stocks in the industry, we can invest in OMI at a lower price. OMI is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities.
Dig deeper into Owens & Minor here.
Patterson Companies, Inc. (NASDAQ:PDCO)
Patterson Companies, Inc. distributes and sells dental and animal health products in the United States, the United Kingdom, and Canada. Formed in 1877, and now led by CEO Mark Walchirk, the company size now stands at 7,500 people and with the company’s market capitalisation at USD $2.33B, we can put it in the mid-cap group.
PDCO’s shares are now hovering at around -48% lower than its actual level of $47.89, at a price tag of US$24.92, based on my discounted cash flow model. This discrepancy gives us a chance to invest in PDCO at a discount. Additionally, PDCO’s PE ratio is trading at 9.6x against its its Healthcare peer level of, 20.34x indicating that relative to its comparable set of companies, you can buy PDCO for a cheaper price. PDCO is also a financially robust company, with current assets covering liabilities in the near term and over the long run.
Dig deeper into Patterson Companies here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks. Or create your own list by filtering companies based on fundamentals such as intrinsic discount, health score and future outlook using this free stock screener.
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.