Companies, such as 49 North Resources, trading at a market price below their true values are considered to be undervalued. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
49 North Resources Inc. (TSXV:FNR)
49 North Resources Inc. is a venture capital firm specializing in seed capital and early stage investments. 49 North Resources was started in 2005 and has a market cap of CAD CA$4.44M, putting it in the small-cap group.
FNR’s shares are currently floating at around -97% below its value of $2.88, at a price tag of $0.08, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy FNR shares at a low price. Also, FNR’s PE ratio is currently around 0.6x compared to its capital markets peer level of 16.4x, indicating that relative to its peers, you can buy FNR’s shares at a cheaper price. FNR is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 31%, which has been declining for the last couple of years revealing its capability to reduce its debt obligations year on year.
Pinedale Energy Limited (TSXV:MCF)
Pinedale Energy Limited engages in the identification, exploration, and development of oil and gas properties in the United States. Pinedale Energy is currently run by J. Windt. With the stock’s market cap sitting at CAD CA$2.97M, it falls under the small-cap group
MCF’s shares are currently trading at -58% below its true level of $0.77, at the market price of $0.32, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy MCF shares at a low price. In addition to this, MCF’s PE ratio is trading at 0.7x against its its oil, gas and consumable fuels peer level of 22.4x, suggesting that relative to its peers, you can purchase MCF’s stock for a lower price right now. MCF is also strong in terms of its financial health, 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 49% has over time, showing MCF’s ability
Cervus Equipment Corporation (TSX:CERV)
Cervus Equipment Corporation primarily engages in the sale, after-sale service, and maintenance of agricultural, transportation, construction, and industrial equipment. Established in 2003, and headed by CEO Graham Drake, the company size now stands at 1,794 people and with the company’s market cap sitting at CAD CA$235.83M, it falls under the small-cap stocks category.
CERV’s shares are now trading at -34% under its actual value of $22.3, at the market price of $14.76, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy CERV shares at a discount. In addition to this, CERV’s PE ratio stands at 8.9x against its its trading companies and distributors peer level of 14.1x, implying that relative to its comparable company group, we can buy CERV’s stock at a cheaper price today. CERV is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 85%, which has for the past few years signalling its capacityFor more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.