Companies, such as Exco Technologies, trading at a market price below their true values are considered to be undervalued. Investors can profit from the difference by investing in these 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.
Exco Technologies Limited (TSX:XTC)
Exco Technologies Limited, together with its subsidiaries, designs, develops, manufactures, and sells dies, molds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Started in 1952, and headed by CEO Brian Robbins, the company size now stands at 6,879 people and with the stock’s market cap sitting at CAD CA$375.80M, it comes under the small-cap category.
XTC’s stock is currently trading at -36% less than its intrinsic level of $13.77, at the market price of CA$8.88, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Additionally, XTC’s PE ratio stands at 9.95x compared to its Machinery peer level of, 35.11x suggesting that relative to its comparable set of companies, XTC’s shares can be purchased for a lower price. XTC is also strong financially, as short-term assets amply cover upcoming and long-term liabilities.
More on Exco Technologies here.
Transat A.T. Inc. (TSX:TRZ)
Transat A.T. Inc. operates as an integrated tour operator in the Americas, Europe, and the Middle East. Formed in 1987, and currently lead by Jean-Marc Eustache, the company size now stands at 5,055 people and with the market cap of CAD CA$301.88M, it falls under the small-cap category.
TRZ’s stock is now hovering at around -56% less than its real value of $18.35, at a price tag of CA$8.06, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy TRZ shares at a low price. In terms of relative valuation, TRZ’s PE ratio stands at around 1.71x compared to its Hospitality peer level of, 18.3x indicating that relative to its competitors, you can buy TRZ for a cheaper price. TRZ is also strong financially, with current assets covering liabilities in the near term and over the long run. TRZ has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on Transat A.T here.
McChip Resources Inc. (TSXV:MCS)
McChip Resources Inc. operates in the natural resource industry in Canada. McChip Resources was established in 1935 and with the stock’s market cap sitting at CAD CA$3.34M, it comes under the small-cap group.
MCS’s stock is now hovering at around -91% beneath its true level of $6.53, at a price tag of CA$0.59, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, MCS’s PE ratio is currently around 1.21x compared to its Oil and Gas peer level of, 19.61x indicating that relative to its comparable set of companies, we can buy MCS’s stock at a cheaper price today. MCS is also in good financial health, with current assets covering liabilities in the near term and over the long run. It’s debt-to-equity ratio of 7.11% has been declining over time, signalling its capability to pay down its debt. Interested in McChip Resources? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.