Undervalued companies are those that trade at a price lower than their actual values, such as Celestica and Q Investments. 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.
Celestica Inc. (TSX:CLS)
Celestica Inc. provides supply chain solutions in Canada and internationally. Established in 1996, and headed by CEO Robert Mionis, the company size now stands at 23,000 people and with the stock’s market cap sitting at CAD CA$1.83B, it comes under the small-cap stocks category.
CLS’s stock is currently floating at around -16% beneath its true value of $15.49, at the market price of $12.98, based on its expected future cash flows. The mismatch signals a potential chance to invest in CLS at a discounted price. What’s even more appeal is that CLS’s PE ratio is trading at 14.4x while its electronic peer level trades at 46.7x, suggesting that relative to its peers, we can invest in CLS at a lower price. CLS is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run.
More detail on Celestica here.
Q Investments Ltd. (TSXV:QI)
Q Investments Ltd. is a venture capital firm specializing in investments in early stage. The company was established in 1980 and has a market cap of CAD CA$703.82K, putting it in the small-cap category.
QI’s stock is now hovering at around -94% beneath its intrinsic value of $3.6, at a price tag of $0.23, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Moreover, QI’s PE ratio is currently around 1.4x compared to its capital markets peer level of 13.8x, implying that relative to other stocks in the industry, you can buy QI for a cheaper price. QI is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run.
More on Q Investments here.
Brampton Brick Limited (TSX:BBL.A)
Brampton Brick Limited, together with its subsidiaries, manufactures and sells masonry and landscape products for residential construction and institutional, commercial, and industrial building projects in Canada and the United States. Formed in 1871, and currently lead by Jeffrey Kerbel, the company employs 303 people and has a market cap of CAD CA$102.06M, putting it in the small-cap group.
BBL.A’s stock is currently trading at -69% less than its intrinsic value of $30.28, at the market price of $9.3, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Furthermore, BBL.A’s PE ratio stands at around 9.9x while its basic materials peer level trades at 25.2x, indicating that relative to other stocks in the industry, you can buy BBL.A for a cheaper price. BBL.A is also strong financially, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 23% has been declining for the last couple of years revealing its ability to pay down its debt. Interested in Brampton Brick? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our 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.