Best-In-Class ASX Undervalued Stocks

Xenith IP Group and Mineral Commodities are two of the stocks I have identified as undervalued. This means their current share prices are trading at levels less than what the companies are actually worth. 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.

Xenith IP Group Limited (ASX:XIP)

Xenith IP Group Limited provides intellectual property (IP) services and advice relating to the identification, registration, management, commercialization, and enforcement of IP rights in Australia, New Zealand, and internationally. Formed in 1859, and headed by CEO Craig Dower, the company employs 100 people and with the company’s market capitalisation at AUD A$109.57M, we can put it in the small-cap stocks category.

XIP’s stock is currently hovering at around -41% beneath its real value of $2.09, at a price of AU$1.24, according to my discounted cash flow model. The divergence signals an opportunity to buy XIP shares at a low price. XIP is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. Dig deeper into Xenith IP Group here.

ASX:XIP PE PEG Gauge Apr 19th 18
ASX:XIP PE PEG Gauge Apr 19th 18

Mineral Commodities Ltd (ASX:MRC)

Mineral Commodities Ltd explores for and develops mineral sand resources in South Africa. Mineral Commodities is currently led by CEO Mark Caruso. With the stock’s market cap sitting at AUD A$87.14M, it comes under the small-cap category

MRC’s shares are currently hovering at around -68% below its actual worth of $0.65, at the market price of AU$0.21, based on its expected future cash flows. The mismatch signals a potential chance to invest in MRC at a discounted price. In addition to this, MRC’s PE ratio is currently around 6.68x while its Metals and Mining peer level trades at, 14.46x indicating that relative to other stocks in the industry, MRC can be bought at a cheaper price right now. MRC is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. More detail on Mineral Commodities here.

ASX:MRC PE PEG Gauge Apr 19th 18
ASX:MRC PE PEG Gauge Apr 19th 18

Legend Corporation Limited (ASX:LGD)

Legend Corporation Limited provides engineering solutions in Australia and New Zealand. Legend was formed in 1962 and with the company’s market cap sitting at AUD A$50.21M, it falls under the small-cap category.

LGD’s shares are currently floating at around -60% lower than its actual value of $0.57, at a price of AU$0.23, based on its expected future cash flows. This mismatch indicates a chance to invest in LGD at a discounted price. Additionally, LGD’s PE ratio is currently around 9.11x while its Trade Distributors peer level trades at, 16.89x meaning that relative to other stocks in the industry, LGD can be bought at a cheaper price right now. LGD is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 24.33%, which has been diminishing for the past few years signalling LGD’s capacity to pay down its debt. Interested in Legend? Find out more here.

ASX:LGD PE PEG Gauge Apr 19th 18
ASX:LGD PE PEG Gauge Apr 19th 18

For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.