Yahoo Finance Best-In-Class Undervalued Stocks
SCISYS and Bellway may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. There’s a few ways you can value a company. 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. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
SCISYS PLC (AIM:SSY)
SCISYS PLC provides IT services to large corporations and public sector organizations in the United Kingdom, rest of Europe, and internationally. Started in 1980, and currently lead by Klaus Heidrich, the company currently employs 592 people and with the market cap of GBP £47.34M, it falls under the small-cap stocks category.
SSY’s stock is currently hovering at around -24% under its actual level of £2.11, at a price of UK£1.62, according to my discounted cash flow model. This mismatch indicates a chance to invest in SSY at a discounted price. Additionally, SSY’s PE ratio stands at 14.02x compared to its IT peer level of, 23.26x implying that relative to its comparable company group, SSY’s shares can be purchased for a lower price. SSY is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run.
More detail on SCISYS here.
Bellway p.l.c. (LSE:BWY)
Bellway p.l.c., together with its subsidiaries, engages in the house building business in the United Kingdom. Established in 1978, and currently headed by CEO Edward Ayres, the company size now stands at 2,595 people and with the market cap of GBP £3.79B, it falls under the mid-cap category.
BWY’s stock is now floating at around -30% less than its intrinsic value of £44.17, at the market price of UK£30.87, based on my discounted cash flow model. This discrepancy gives us a chance to invest in BWY at a discount. Additionally, BWY’s PE ratio stands at around 7.75x relative to its Consumer Durables peer level of, 10.37x indicating that relative to its competitors, we can buy BWY’s stock at a cheaper price today. BWY is also in great financial shape, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 7.23% has been declining over time, signifying its capability to pay down its debt. More on Bellway here.
Laura Ashley Holdings plc (LSE:ALY)
Laura Ashley Holdings plc designs, manufactures, sources, distributes, retails, and sells furniture, home accessories, decorating, and fashion products. Founded in 1971, and currently run by Kwan Cheong Ng, the company provides employment to 3,196 people and with the company’s market cap sitting at GBP £34.05M, it falls under the small-cap stocks category.
ALY’s stock is currently hovering at around -63% less than its actual level of £0.13, at a price tag of UK£0.047, based on its expected future cash flows. The divergence signals an opportunity to buy ALY shares at a low price.
ALY 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.
Dig deeper into Laura Ashley Holdings 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.
