A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for High Arctic Energy Services and Advantage Oil & Gas. 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.
High Arctic Energy Services Inc (TSX:HWO)
High Arctic Energy Services Inc. operates as an oilfield services company in Western Canada and Papua New Guinea. Formed in 1993, and headed by CEO J. Bailey, the company employs 809 people and with the company’s market capitalisation at CAD CA$208.45M, we can put it in the small-cap category.
HWO’s stock is currently hovering at around -30% less than its true value of $5.55, at the market price of CA$3.88, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. What’s even more appeal is that HWO’s PE ratio is around 8.48x against its its Energy Services peer level of, 19.18x meaning that relative to its competitors, HWO can be bought at a cheaper price right now. HWO is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 4.61% has been diminishing for the last couple of years indicating HWO’s ability to reduce its debt obligations year on year. More on High Arctic Energy Services here.
Advantage Oil & Gas Ltd. (TSX:AAV)
Advantage Oil & Gas Ltd., together with its subsidiaries, acquires, exploits, develops, and produces natural gas in the province of Alberta, Canada. Founded in 2001, and currently run by Andy Mah, the company size now stands at 29 people and with the market cap of CAD CA$704.80M, it falls under the small-cap stocks category.
AAV’s shares are now floating at around -20% beneath its real value of $4.68, at the market price of CA$3.74, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy AAV shares at a discount. In terms of relative valuation, AAV’s PE ratio is currently around 10.7x while its Oil and Gas peer level trades at, 14.93x suggesting that relative to its peers, we can buy AAV’s stock at a cheaper price today. AAV is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to equity ratio of 12.14% has been diminishing over the past couple of years showing AAV’s capability to reduce its debt obligations year on year. Continue research on Advantage Oil & Gas here.
Tidewater Midstream and Infrastructure Ltd. (TSX:TWM)
Tidewater Midstream and Infrastructure Ltd. Tidewater Midstream and Infrastructure was started in 2015 and with the market cap of CAD CA$450.69M, it falls under the small-cap stocks category.
TWM’s stock is now hovering at around -53% beneath its true value of $3, at the market price of CA$1.42, based on its expected future cash flows. The mismatch signals a potential chance to invest in TWM at a discounted price.
TWM is also in good financial health, with current assets covering liabilities in the near term and over the long run.
More on Tidewater Midstream and Infrastructure 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.