Stocks recently deemed undervalued include McRae Industries and Village Super Market, as they trade at a market price below their true valuations. 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.
McRae Industries, Inc. (OTCPK:MCRA.A)
McRae Industries, Inc. manufactures and sells military combat boots for the United States Army. McRae Industries was formed in 1959 and has a market cap of USD $82.65M, putting it in the small-cap stocks category.
MCRA.A’s stock is now hovering at around -66% lower than its real value of $100.58, at the market price of $34.22, based on its expected future cash flows. This discrepancy gives us a chance to invest in MCRA.A at a discount. In addition to this, MCRA.A’s PE ratio is currently around 17x against its its luxury peer level of 21.8x, suggesting that relative to its peers, MCRA.A can be bought at a cheaper price right now. MCRA.A is also robust in terms of financial health, with current assets covering liabilities in the near term and over the long run. MCRA.A has zero debt on its books as well, meaning it has no long term debt obligations to worry about.
Village Super Market, Inc. (NASDAQ:VLGE.A)
Village Super Market, Inc. operates a chain of supermarkets in the United States. Founded in 1937, and now run by Robert Sumas, the company currently employs 4,128 people and with the company’s market cap sitting at USD $330.98M, it falls under the small-cap stocks category.
VLGE.A’s shares are currently hovering at around -62% below its intrinsic level of $60.02, at the market price of $23, according to my discounted cash flow model. The divergence signals an opportunity to buy VLGE.A shares at a low price. In terms of relative valuation, VLGE.A’s PE ratio is trading at around 15.1x compared to its consumer retailing peer level of 20.1x, meaning that relative to its competitors, we can buy VLGE.A’s stock at a cheaper price today. VLGE.A is also in good financial health, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 15%, which has been reducing for the past few years signalling VLGE.A’s ability to pay down its debt.
Francesca’s Holdings Corporation (NASDAQ:FRAN)
Francesca’s Holdings Corporation, through its subsidiaries, operates a chain of retail boutiques. Formed in 1999, and currently lead by Steven Lawrence, the company provides employment to 3,994 people and with the stock’s market cap sitting at USD $215.27M, it comes under the small-cap group.
FRAN’s shares are currently floating at around -48% beneath its real value of $11.43, at the market price of $5.95, based on its expected future cash flows. signalling an opportunity to buy the stock at a low price. Additionally, FRAN’s PE ratio is trading at 8.2x while its specialty retail peer level trades at 18x, suggesting that relative to its comparable company group, you can buy FRAN for a cheaper price. FRAN is also robust in terms of financial health, with current assets covering liabilities in the near term and over the long run. FRAN also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.
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.