China All Access (Holdings), China Display Optoelectronics Technology Holdings, and Cowell e Holdings are technology companies which share a common feature – they’re also great dividend stocks. The tech sector is known to be highly cyclical and volatile since companies tend to find it difficult to create sustainable competitive advantage and generally rely on discretionary income from consumers. China All Access (Holdings) and China Display Optoelectronics Technology Holdings are tech stocks on my list that are potentially undervalued, which means their current share prices are trading well-below what the companies are actually worth. There’s a few ways you can determine how much a cyclical 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.
China All Access (Holdings) Limited (SEHK:633)
China All Access (Holdings) Limited, an investment holding company, provides communication application solutions and services in the People’s Republic of China. Founded in 2007, and currently lead by Kwok Keung Shao, the company size now stands at 1,664 people and with the stock’s market cap sitting at HKD HK$1.49B, it comes under the small-cap group.
633’s shares are currently hovering at around -70% less than its intrinsic value of ¥2.64, at a price tag of HK$0.78, based on its expected future cash flows. The divergence signals an opportunity to buy 633 shares at a low price. Moreover, 633’s PE ratio is trading at around 5.43x against its its Communications peer level of, 15.55x meaning that relative to its comparable company group, you can buy 633’s shares at a cheaper price. 633 is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. More on China All Access (Holdings) here.
China Display Optoelectronics Technology Holdings Limited (SEHK:334)
China Display Optoelectronics Technology Holdings Limited, an investment holding company, engages in the research, development, manufacture, distribution, and sale of liquid crystal display modules for mobile phones and tablets in Hong Kong, China, South Korea, and Taiwan. Established in 2004, and now led by CEO Jian Li, the company employs 2,593 people and with the company’s market capitalisation at HKD HK$1.50B, we can put it in the small-cap group.
334’s stock is currently trading at -55% below its true level of ¥1.6, at the market price of HK$0.72, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Additionally, 334’s PE ratio is currently around 10.19x while its index peer level trades at, 13.32x meaning that relative to its comparable set of companies, you can purchase 334’s stock for a lower price right now. 334 is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities. More on China Display Optoelectronics Technology Holdings here.
Cowell e Holdings Inc. (SEHK:1415)
Cowell e Holdings Inc., an investment holding company, engages in the design, development, manufacture, and sale of camera modules for smartphones, multimedia tablets, laptops, PDAs, and other mobile devices with camera functions in China and South Korea. Established in 1992, and headed by CEO Kyung Lee, the company now has 4,267 employees and with the stock’s market cap sitting at HKD HK$1.72B, it comes under the small-cap group.
1415’s stock is currently hovering at around -54% below its actual worth of $4.53, at a price tag of HK$2.07, based on its expected future cash flows. This discrepancy gives us a chance to invest in 1415 at a discount. What’s even more appeal is that 1415’s PE ratio is currently around 7.94x against its its Electronic peer level of, 11.98x implying that relative to its peers, we can invest in 1415 at a lower price. 1415 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 14.13% has been reducing for the past few years signalling its ability to reduce its debt obligations year on year. Dig deeper into Cowell e Holdings here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.