UP Global Sourcing Holdings and Tekcapital may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. 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.
UP Global Sourcing Holdings plc (LSE:UPGS)
UP Global Sourcing Holdings plc, through its subsidiaries, supplies branded household products worldwide. Founded in 1997, and headed by CEO Simon Showman, the company now has 200 employees and with the company’s market capitalisation at GBP £37.72M, we can put it in the small-cap stocks category.
UPGS’s shares are now trading at -80% under its real value of £2.27, at a price of UK£0.46, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Moreover, UPGS’s PE ratio stands at 10.98x relative to its Retail Distributors peer level of, 11.65x suggesting that relative to other stocks in the industry, you can purchase UPGS’s stock for a lower price right now. UPGS is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 100.58% has been dropping over the past couple of years showing UPGS’s ability to pay down its debt. Continue research on UP Global Sourcing Holdings here.
Tekcapital plc (AIM:TEK)
Tekcapital Plc, through its subsidiaries, operates as a university technology and intellectual property services company in the United Kingdom and the United States. Tekcapital was established in 2014 and with the company’s market cap sitting at GBP £7.25M, it falls under the small-cap stocks category.
TEK’s stock is now floating at around -80% below its true value of $0.83, at a price tag of UK£0.17, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy TEK shares at a low price. What’s even more appeal is that TEK’s PE ratio is currently around 2.11x while its Professional Services peer level trades at, 18.04x indicating that relative to its comparable company group, we can buy TEK’s stock at a cheaper price today. TEK also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run. TEK also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More detail on Tekcapital here.
Triad Group plc (LSE:TRD)
Triad Group Plc provides IT resourcing, consultancy, and solutions services to the public and private sectors primarily in the United Kingdom. Formed in 1988, and currently run by John Rigg, the company employs 56 people and with the company’s market capitalisation at GBP £9.41M, we can put it in the small-cap group.
TRD’s shares are currently floating at around -44% beneath its actual level of £1.05, at a price of UK£0.59, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. In terms of relative valuation, TRD’s PE ratio stands at around 5.69x against its its IT peer level of, 27.73x meaning that relative to its comparable company group, you can buy TRD for a cheaper price. TRD is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. TRD has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on Triad Group here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.