Live Oak Bancshares and Taro Pharmaceutical Industries may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. 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.
Live Oak Bancshares, Inc. (NASDAQ:LOB)
Live Oak Bancshares, Inc. operates as the bank holding company for the Live Oak Banking Company that provides various commercial banking products and services to individuals and businesses in North Carolina. Established in 2008, and currently headed by CEO James Mahan, the company provides employment to 517 people and has a market cap of USD $1.16B, putting it in the small-cap stocks category.
LOB’s stock is now floating at around -43% less than its actual value of $50.84, at a price tag of US$29.10, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Furthermore, LOB’s PE ratio is around 10.34x relative to its Banks peer level of, 17.08x indicating that relative to other stocks in the industry, we can purchase LOB’s shares for cheaper. LOB is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. LOB also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in Live Oak Bancshares? Find out more here.
Taro Pharmaceutical Industries Ltd. (NYSE:TARO)
Taro Pharmaceutical Industries Ltd., a science-based pharmaceutical company, engages in the development, manufacture, and marketing of pharmaceutical products in the United States, Canada, Israel, and internationally. Founded in 1959, and now run by Uday Baldota, the company now has 1,413 employees and with the market cap of USD $4.27B, it falls under the mid-cap category.
TARO’s stock is currently hovering at around -28% below its actual worth of $148.97, at a price of US$107.63, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy TARO shares at a discount. Also, TARO’s PE ratio is trading at 20.87x while its Pharmaceuticals peer level trades at, 22.42x meaning that relative to its competitors, TARO’s shares can be purchased for a lower price. TARO is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities. TARO has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Continue research on Taro Pharmaceutical Industries here.
Hi-Crush Partners LP (NYSE:HCLP)
Hi-Crush Partners LP, together with its subsidiaries, provides proppant and logistics solutions to the energy industry in North America. Founded in 2012, and currently headed by CEO Robert Rasmus, the company currently employs 95 people and with the market cap of USD $1.18B, it falls under the small-cap stocks category.
HCLP’s shares are now hovering at around -53% less than its intrinsic value of $28.98, at a price of US$13.70, based on its expected future cash flows. This discrepancy gives us a chance to invest in HCLP at a discount. In addition to this, HCLP’s PE ratio stands at 8.69x relative to its Energy Services peer level of, 24.26x implying that relative to other stocks in the industry, we can purchase HCLP’s shares for cheaper. HCLP is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 24.18%, which has been reducing for the past few years signalling its capability to reduce its debt obligations year on year. More on Hi-Crush Partners 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.