Companies that are recently trading at a market price lower than their real values include Alacer Gold and Stornoway Diamond. 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.
Alacer Gold Corp. (TSX:ASR)
Alacer Gold Corp., an intermediate gold mining company, engages in the mining, development, and exploration of mineral deposits in Turkey. The company now has 406 employees and with the company’s market cap sitting at CAD CA$653.59M, it falls under the small-cap stocks category.
ASR’s shares are now floating at around -32% beneath its actual level of $3.27, at the market price of $2.23, according to my discounted cash flow model. The divergence signals an opportunity to buy ASR shares at a low price. Also, ASR’s PE ratio is around 9.9x relative to its metals and mining peer level of 11.6x, suggesting that relative to its peers, ASR’s shares can be purchased for a lower price. ASR is also robust in terms of financial health, as current assets can cover liabilities in the near term and over the long run.
Stornoway Diamond Corporation (TSX:SWY)
Stornoway Diamond Corporation engages in the mining, acquisition, and exploration of diamond properties in Canada. Started in 1986, and now led by CEO Matthew Manson, the company currently employs 492 people and with the market cap of CAD CA$551.27M, it falls under the small-cap group.
SWY’s stock is currently trading at -28% less than its true level of $0.92, at a price tag of $0.66, based on my discounted cash flow model. This discrepancy gives us a chance to invest in SWY at a discount. In terms of relative valuation, SWY’s PE ratio is currently around 11.3x against its its metals and mining peer level of 11.6x, implying that relative to its comparable set of companies, SWY’s shares can be purchased for a lower price. SWY also has a healthy balance sheet, as current assets can cover liabilities in the near term and over the long run.
Evergreen Gaming Corporation (TSXV:TNA)
Evergreen Gaming Corporation engages in the gaming operations in the United States. Evergreen Gaming is headed by CEO Dawn Mangano. It currently has a market cap of CAD CA$21.05M placing it in the small-cap category
TNA’s stock is now floating at around -69% below its true value of $0.56, at the market price of $0.17, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, TNA’s PE ratio is currently around 9x compared to its hospitality peer level of 16.3x, meaning that relative to its comparable set of companies, TNA’s stock can be bought at a cheaper price. TNA is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 49% has been diminishing over the past couple of years showing its ability to reduce its debt obligations year on year.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.