Companies, such as Village Super Market, are deemed to be undervalued because their shares are currently trading below their true values. 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.
Village Super Market, Inc. (NASDAQ:VLGE.A)
Village Super Market, Inc. operates a chain of supermarkets in the United States. Formed in 1937, and currently headed by CEO Robert Sumas, the company now has 4,128 employees and with the company’s market cap sitting at USD $398.02M, it falls under the small-cap group.
VLGE.A’s stock is now hovering at around -56% under its actual level of $63.44, at a price tag of US$27.68, according to my discounted cash flow model. This difference in price and value gives us a chance to buy low. Additionally, VLGE.A’s PE ratio stands at 15.75x compared to its Consumer Retailing peer level of, 21.7x meaning that relative to its comparable set of companies, VLGE.A’s shares can be purchased for a lower price. VLGE.A is also a financially robust company, 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 16.90% has been diminishing over time, revealing VLGE.A’s capacity to reduce its debt obligations year on year. Continue research on Village Super Market here.
SandRidge Mississippian Trust II (NYSE:SDR)
SandRidge Mississippian Trust II holds royalty interests in oil and natural gas properties. The company was established in 2011 and with the stock’s market cap sitting at USD $62.16M, it comes under the small-cap stocks category.
SDR’s shares are now trading at -58% beneath its true value of $2.9, at a price tag of US$1.23, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Also, SDR’s PE ratio is currently around 5.36x compared to its Oil and Gas peer level of, 13.78x meaning that relative to its comparable set of companies, you can purchase SDR’s stock for a lower price right now. SDR is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities. SDR has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Interested in SandRidge Mississippian Trust II? Find out more here.
Coherent, Inc. (NASDAQ:COHR)
Coherent, Inc. provides lasers and laser-based technology in a range of scientific, commercial, and industrial applications worldwide. Founded in 1966, and headed by CEO John Ambroseo, the company employs 5,218 people and with the company’s market capitalisation at USD $4.23B, we can put it in the mid-cap category.
COHR’s shares are now hovering at around -41% less than its true level of $294.91, at the market price of US$175.45, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy COHR shares at a low price. Moreover, COHR’s PE ratio is trading at 17.78x while its Electronic peer level trades at, 22.08x suggesting that relative to its comparable company group, we can buy COHR’s stock at a cheaper price today. COHR also has a healthy balance sheet, as short-term assets amply cover upcoming and long-term liabilities. COHR also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. More detail on Coherent 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.