Undervalued companies are those that trade at a price lower than their actual values, such as Nova Lifestyle and Yirendai. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Nova Lifestyle, Inc. (NASDAQ:NVFY)
Nova LifeStyle, Inc. and its subsidiaries, designs, manufactures, markets, and sells residential furniture for middle and upper middle-income consumers worldwide. Started in 2003, and run by CEO Thanh Lam, the company provides employment to 33 people and has a market cap of USD $59.36M, putting it in the small-cap group.
NVFY’s stock is now trading at -36% below its true level of $3.39, at the market price of US$2.16, based on its expected future cash flows. This mismatch signals an opportunity to buy NVFY shares at a discount. Also, NVFY’s PE ratio stands at 15.88x against its its Consumer Durables peer level of, 16.01x implying that relative to its peers, you can buy NVFY for a cheaper price. NVFY is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 6.14% has been dropping for the past few years signalling NVFY’s ability to pay down its debt. Dig deeper into Nova Lifestyle here.
Yirendai Ltd. (NYSE:YRD)
Yirendai Ltd. operates as an online consumer finance marketplace that connects borrowers and investors primarily in the People’s Republic of China. Founded in 2012, and run by CEO Yihan Fang, the company currently employs 911 people and with the market cap of USD $2.41B, it falls under the mid-cap category.
YRD’s shares are currently hovering at around -55% less than its actual value of ¥89.24, at the market price of US$40.23, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Furthermore, YRD’s PE ratio is around 11.08x against its its Consumer Finance peer level of, 13.96x meaning that relative to its comparable set of companies, you can buy YRD for a cheaper price. YRD is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. YRD has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Interested in Yirendai? Find out more here.
ACCO Brands Corporation (NYSE:ACCO)
ACCO Brands Corporation designs, manufactures, and markets, consumer and business products. The company employs 6620 people and with the company’s market cap sitting at USD $1.35B, it falls under the small-cap stocks category.
ACCO’s shares are now floating at around -43% less than its actual worth of $22.03, at a price tag of US$12.55, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Moreover, ACCO’s PE ratio is around 10.3x while its Commercial Services peer level trades at, 17.64x indicating that relative to its competitors, we can invest in ACCO at a lower price. ACCO is also strong in terms of its financial health, with current assets covering liabilities in the near term and over the long run. It’s debt-to-equity ratio of 120.45% has been dropping for the last couple of years indicating ACCO’s ability to pay down its debt. Interested in ACCO Brands? Find out more 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.