Companies with shares trading at a market price below what they are actually worth, such as MS INTERNATIONAL and Chesnara, are deemed undervalued. 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.
MS INTERNATIONAL plc (AIM:MSI)
MS INTERNATIONAL plc designs, manufactures, sells, and services engineering products in Europe, North America, and internationally. Established in 1960, and now run by , the company now has 409 employees and has a market cap of GBP £30.70M, putting it in the small-cap group.
MSI’s shares are now trading at -63% lower than its true value of £5.08, at the market price of UK£1.88, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. What’s even more appeal is that MSI’s PE ratio stands at around 13.8x against its its Aerospace & Defense peer level of, 21.56x indicating that relative to its competitors, MSI’s stock can be bought at a cheaper price. MSI is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. MSI has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Interested in MS INTERNATIONAL? Find out more here.
Chesnara plc (LSE:CSN)
Chesnara plc, together with its subsidiaries, engages in life assurance and pension businesses primarily in the United Kingdom, the Netherlands, and Sweden. Established in 2003, and now run by John Deane, the company size now stands at 329 people and with the company’s market capitalisation at GBP £592.47M, we can put it in the small-cap group.
CSN’s shares are currently hovering at around -47% under its intrinsic value of £7.56, at a price of UK£4.02, based on my discounted cash flow model. The mismatch signals a potential chance to invest in CSN at a discounted price. In addition to this, CSN’s PE ratio is around 7.67x while its Insurance peer level trades at, 17.66x meaning that relative to its comparable set of companies, we can invest in CSN at a lower price. CSN is also a financially robust company, as current assets can cover liabilities in the near term and over the long run.
Dig deeper into Chesnara here.
The Independent Investment Trust PLC (LSE:IIT)
The Independent Investment Trust PLC is a publically owned investment manager. Independent Investment Trust was formed in 2000 and has a market cap of GBP £423.24M, putting it in the small-cap group.
IIT’s stock is currently floating at around -76% lower than its true value of £31.62, at a price of UK£7.62, according to my discounted cash flow model. This mismatch indicates a chance to invest in IIT at a discounted price. Moreover, IIT’s PE ratio stands at around 3.51x against its its Capital Markets peer level of, 16.1x suggesting that relative to its comparable set of companies, we can invest in IIT at a lower price. IIT is also strong in terms of its financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. IIT has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on Independent Investment Trust 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.