Yahoo Finance Best Discounted Cylical Stocks in June
The fortunes of financial services companies often follow that of the broader economy, since these businesses provide services such as consumer financing and investment banking, which tend to do well when times are good. Currently, Livermore Investments Group and Sherborne Investors (Guernsey) B are financial companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. There’s a few ways you can value a financial 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.
Livermore Investments Group Limited (AIM:LIV)
Livermore Investments Group Limited invests in real estate, private equity, hedge funds, and capital markets. The company was established in 2002 and with the company’s market cap sitting at GBP £71.85M, it falls under the small-cap group.
LIV’s stock is currently floating at around -50% beneath its true level of $0.83, at the market price of UK£0.41, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Also, LIV’s PE ratio is currently around 5.93x while its Capital Markets peer level trades at, 15.2x suggesting that relative to its comparable company group, LIV can be bought at a cheaper price right now. LIV is also strong financially, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. LIV also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in Livermore Investments Group? Find out more here.
Sherborne Investors (Guernsey) B Limited (LSE:SIGB)
Sherborne Investors (Guernsey) B Limited is a private equity firm specializing in investments in undervalued companies and turnarounds. Sherborne Investors (Guernsey) B was formed in 2012 and with the company’s market capitalisation at GBP £79.90M, we can put it in the small-cap group.
SIGB’s shares are now trading at -59% less than its intrinsic value of £0.62, at a price of UK£0.25, based on my discounted cash flow model. The mismatch signals a potential chance to invest in SIGB at a discounted price. In terms of relative valuation, SIGB’s PE ratio is around 1.73x while its Capital Markets peer level trades at, 15.2x meaning that relative to its competitors, we can buy SIGB’s stock at a cheaper price today. SIGB is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities. SIGB has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Continue research on Sherborne Investors (Guernsey) B here.
International Personal Finance plc (LSE:IPF)
International Personal Finance plc, together with its subsidiaries, provides consumer credit products in Northern Europe, Lithuania, Slovakia, Mexico, Southern Europe, and Australia. Started in 1997, and run by CEO Gerard Ryan, the company provides employment to 11,671 people and with the company’s market cap sitting at GBP £454.90M, it falls under the small-cap category.
IPF’s shares are now trading at -21% under its actual level of £2.7, at a price of UK£2.12, based on its expected future cash flows. The mismatch signals a potential chance to invest in IPF at a discounted price. Also, IPF’s PE ratio stands at 10.49x compared to its Consumer Finance peer level of, 13.15x suggesting that relative to its comparable set of companies, IPF can be bought at a cheaper price right now. IPF is also in good financial health, with near-term assets able to cover upcoming and long-term liabilities.
More detail on International Personal Finance 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.
