Undervalued companies, such as ThreeD Capital and Conifex Timber, are those that trade at a price below their actual values. 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.
ThreeD Capital Inc. (CNSX:IDK)
ThreeD Capital Inc., formerly known as Brownstone Energy Inc., is a venture capital firm specializing in early stage and growth capital opportunistic investments. ThreeD Capital was started in 1987 and has a market cap of CAD CA$14.75M, putting it in the small-cap group.
IDK’s stock is currently hovering at around -88% below its actual level of $1.17, at the market price of CA$0.14, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Furthermore, IDK’s PE ratio is around 2.06x compared to its Capital Markets peer level of, 12.34x indicating that relative to its comparable company group, we can purchase IDK’s shares for cheaper. IDK is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. IDK has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on ThreeD Capital here.
Conifex Timber Inc. (TSX:CFF)
Conifex Timber Inc. primarily manufactures and sells lumber products in the United States, China, Canada, and Japan. Started in 2007, and currently lead by Kenneth Shields, the company provides employment to 698 people and with the stock’s market cap sitting at CAD CA$145.94M, it comes under the small-cap category.
CFF’s shares are now trading at -65% under its actual level of $15.71, at a price of CA$5.52, based on its expected future cash flows. This discrepancy gives us a chance to invest in CFF at a discount. In terms of relative valuation, CFF’s PE ratio is trading at 6.97x while its Forestry peer level trades at, 10.55x suggesting that relative to its comparable company group, you can buy CFF’s shares at a cheaper price. CFF is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run. More on Conifex Timber here.
Martinrea International Inc. (TSX:MRE)
Martinrea International Inc. designs, engineers, manufactures, and sells metal parts, assemblies and modules, fluid management systems, and aluminum products primarily to the automotive industry in North America, Europe, and internationally. Founded in 1987, and now led by CEO Pat D’Eramo, the company employs 15,000 people and with the company’s market cap sitting at CAD CA$1.31B, it falls under the small-cap category.
MRE’s stock is now hovering at around -42% below its actual worth of $26.11, at the market price of CA$15.06, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. In addition to this, MRE’s PE ratio is trading at 7.59x against its its Auto Components peer level of, 16.95x meaning that relative to other stocks in the industry, we can purchase MRE’s shares for cheaper. MRE is also in good financial health, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 64.37% has been reducing for the last couple of years demonstrating MRE’s capacity to reduce its debt obligations year on year. More on Martinrea International here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.