Financial service stocks generally perform in-line with the economy, since these businesses provide services such as consumer financing and investment banking, which tend to do well when times are good. Sachem Capital and Dunxin Financial Holdings are two financial stocks I have identified as undervalued. This means their current share prices are trading at levels less than what the companies are actually worth. Investors can profit from the difference by investing in these financial stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Sachem Capital Corp. (AMEX:SACH)
Sachem Capital Corp. operates as a real estate finance company. Sachem Capital was formed in 2010 and has a market cap of USD $53.18M, putting it in the small-cap stocks category.
SACH’s stock is currently hovering at around -28% lower than its true value of $4.67, at the market price of US$3.36, according to my discounted cash flow model. This mismatch indicates a chance to invest in SACH at a discounted price. What’s even more appeal is that SACH’s PE ratio is trading at 10.06x while its Mortgage peer level trades at, 22.52x meaning that relative to its competitors, SACH’s stock can be bought at a cheaper price. SACH 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 Sachem Capital here.
Dunxin Financial Holdings Limited (AMEX:DXF)
Dunxin Financial Holdings Limited engages in the microfinance lending business in Hubei, China. The company currently employs 31 people and has a market cap of USD $111.25M, putting it in the small-cap category.
DXF’s stock is currently floating at around -39% under its actual level of $8.77, at a price tag of US$5.34, according to my discounted cash flow model. The divergence signals an opportunity to buy DXF shares at a low price. Also, DXF’s PE ratio is currently around 5.43x against its its Diversified Financial peer level of, 13.15x meaning that relative to its comparable set of companies, we can purchase DXF’s shares for cheaper. DXF is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities. Interested in Dunxin Financial Holdings? Find out more here.
Middlefield Banc Corp. (NASDAQ:MBCN)
Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. Formed in 1901, and headed by CEO Thomas Caldwell, the company size now stands at 190 people and with the stock’s market cap sitting at USD $175.79M, it comes under the small-cap stocks category.
MBCN’s stock is now floating at around 36% under its actual value of $35.97, at a price tag of US$48.95, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In terms of relative valuation, MBCN’s PE ratio is trading at 15.68x while its Banks peer level trades at, 17.76x implying that relative to its comparable company group, you can buy MBCN for a cheaper price. MBCN is also in good financial health, with current assets covering liabilities in the near term and over the long run. More on Middlefield Banc here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks. Or create your own list by filtering companies based on fundamentals such as intrinsic discount, health score and future outlook using this free stock screener.