Stocks, such as Paramount Resources and WestJet Airlines, are trading at a value below what they may actually be worth. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Paramount Resources Ltd. (TSX:POU)
Paramount Resources Ltd., an independent energy company, explores for, develops, produces, and markets natural gas, crude oil, and natural gas liquids in Canada. Founded in 1978, and now run by James Riddell, the company employs 304 people and with the company’s market cap sitting at CAD CA$2.16B, it falls under the mid-cap stocks category.
POU’s stock is currently hovering at around -20% less than its actual level of $19.48, at a price of CA$15.57, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy POU shares at a low price. Furthermore, POU’s PE ratio is around 9.73x compared to its Oil and Gas peer level of, 15.11x meaning that relative to its peers, you can buy POU’s shares at a cheaper price. POU is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 28.72% has been reducing over the past couple of years signifying its capacity to pay down its debt. Dig deeper into Paramount Resources here.
WestJet Airlines Ltd. (TSX:WJA)
WestJet Airlines Ltd. provides scheduled airline services and travel packages. Established in 1994, and now led by CEO Gregg Saretsky, the company currently employs 11,089 people and with the market cap of CAD CA$2.78B, it falls under the mid-cap group.
WJA’s shares are now trading at -38% under its intrinsic level of $39.29, at a price tag of CA$24.40, based on my discounted cash flow model. The divergence signals an opportunity to buy WJA shares at a low price. Also, WJA’s PE ratio is currently around 10.01x relative to its index peer level of, 16.22x indicating that relative to other stocks in the industry, we can buy WJA’s stock at a cheaper price today. WJA is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. More on WestJet Airlines here.
Corsa Coal Corp. (TSXV:CSO)
Corsa Coal Corp. engages in mining, processing, and selling metallurgical and thermal coal; and exploring, acquiring, and developing resource properties. The company now has 410 employees and with the stock’s market cap sitting at CAD CA$174.99M, it comes under the small-cap category.
CSO’s stock is now floating at around -70% under its real value of $5.95, at a price of CA$1.78, according to my discounted cash flow model. The divergence signals an opportunity to buy CSO shares at a low price. In terms of relative valuation, CSO’s PE ratio is around 1.86x relative to its Metals and Mining peer level of, 10.07x implying that relative to other stocks in the industry, you can purchase CSO’s stock for a lower price right now. CSO is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 24.83% has been declining for the last couple of years signalling its ability to pay down its debt. Continue research on Corsa Coal here.Or create your own list by filtering TSX and TSXV companies based on fundamentals such as intrinsic discount, health score and future outlook using this free stock screener.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.