Stocks, such as Ambition Group, 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.
Ambition Group Limited (ASX:AMB)
Ambition Group Limited provides permanent and contracting recruitment services in Australia, Asia, and the United Kingdom. Established in 1999, and now led by CEO Nicholas Waterworth, the company now has 275 employees and with the company’s market cap sitting at AUD A$10.17M, it falls under the small-cap stocks category.
AMB’s shares are currently floating at around -76% less than its actual worth of $0.68, at a price of $0.16, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. Moreover, AMB’s PE ratio is currently around 8.2x compared to its professional services peer level of 20.4x, indicating that relative to other stocks in the industry, you can purchase AMB’s stock for a lower price right now. AMB is also strong financially, as current assets can cover liabilities in the near term and over the long run. AMB also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Dig deeper into Ambition Group here.
Kingsgate Consolidated Limited (ASX:KCN)
Kingsgate Consolidated Limited engages in the exploration, development, and mining of mineral properties. Kingsgate Consolidated is currently led by CEO . With the stock’s market cap sitting at AUD A$90.55M, it falls under the small-cap group
KCN’s stock is now hovering at around -80% beneath its value of $1.98, at a price tag of $0.41, based on its expected future cash flows. The mismatch signals a potential chance to invest in KCN at a discounted price. Also, KCN’s PE ratio is trading at 12.8x while its metals and mining peer level trades at 13.9x, indicating that relative to its comparable company group, we can purchase KCN’s shares for cheaper. KCN is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 11% has been diminishing for the last couple of years showing KCN’s ability to reduce its debt obligations year on year. More on Kingsgate Consolidated here.
Namoi Cotton Limited (ASX:NAM)
Namoi Cotton Limited engages in ginning and marketing cotton. Namoi Cotton was formed in 1962 and has a market cap of AUD A$71.40M, putting it in the small-cap stocks category.
NAM’s shares are currently trading at -46% beneath its intrinsic level of $0.97, at a price tag of $0.52, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy NAM shares at a discount. Moreover, NAM’s PE ratio is currently around 6.7x against its its commercial services peer level of 17.5x, indicating that relative to its comparable company group, NAM’s stock can be bought at a cheaper price. NAM also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 37%, which has been dropping for the past few years signalling NAM’s capacity to reduce its debt obligations year on year. More on Namoi Cotton 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.