NAHL Group and Mortice are two of the companies on my list that I consider are undervalued. There’s a few ways you can determine how much a company is actually worth. 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. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
NAHL Group plc (AIM:NAH)
NAHL Group plc provides marketing services focusing on the legal services market in the United Kingdom. Founded in 1993, and currently headed by CEO J. Atkinson, the company employs 186 people and with the stock’s market cap sitting at GBP £78.07M, it comes under the small-cap stocks category.
NAH’s stock is now hovering at around -52% under its real value of £3.49, at the market price of £1.67, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Moreover, NAH’s PE ratio stands at 7.3x relative to its media peer level of 23.8x, suggesting that relative to other stocks in the industry, we can purchase NAH’s shares for cheaper. NAH is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 18%, which has been dropping over time, indicating NAH’s capacity to pay down its debt.
Mortice Limited (AIM:MORT)
Mortice Limited, together with its subsidiaries, provides security services in India and Sri Lanka. Mortice was started in 2008 and with the company’s market cap sitting at GBP £25.37M, it falls under the small-cap group.
MORT’s stock is now trading at -57% lower than its real value of $1.02, at a price tag of $0.45, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. What’s even more appeal is that MORT’s PE ratio is trading at 14.8x relative to its commercial services peer level of 13.6x, meaning that relative to other stocks in the industry, we can purchase MORT’s shares for cheaper. MORT is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run.
Provident Financial plc (LSE:PFG)
Provident Financial plc provides personal credit products to non-standard lending market in the United Kingdom, the Republic of Ireland, and Poland. Established in 1880, and headed by CEO , the company employs 3,712 people and has a market cap of GBP £1.34B, putting it in the small-cap stocks category.
PFG’s shares are currently floating at around -31% lower than its intrinsic value of £13.34, at a price of £9.26, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, PFG’s PE ratio stands at 6.5x compared to its consumer finance peer level of 13.3x, indicating that relative to its competitors, you can buy PFG for a cheaper price. PFG is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 264% has been falling for the past few years revealing its capability 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.