Stocks, such as Equitable Group and Cogeco Communications, are trading at a value below what they may actually be worth. 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.
Equitable Group Inc. (TSX:EQB)
Equitable Group Inc., through its subsidiary, Equitable Bank, provides various financial services to retail and commercial customers in Canada. Established in 1970, and currently headed by CEO Andrew R. Moor, the company provides employment to 569 people and with the company’s market capitalisation at CAD CA$1.03B, we can put it in the small-cap group.
EQB’s shares are now trading at -34% below its intrinsic value of $94.24, at the market price of $62.56, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Moreover, EQB’s PE ratio is currently around 6.5x relative to its mortgage peer level of 12.8x, meaning that relative to its competitors, you can buy EQB’s shares at a cheaper price. EQB is also strong financially, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. More detail on Equitable Group here. TSX:EQB PE PEG Gauge Feb 14th 18
Cogeco Communications Inc. (TSX:CCA)
Cogeco Communications Inc. operates as a communications corporation in North America. Formed in 1972, and headed by CEO Louis Audet, the company employs 4,000 people and with the stock’s market cap sitting at CAD CA$3.70B, it comes under the mid-cap stocks category.
CCA’s stock is currently trading at -55% beneath its true level of $163.44, at the market price of $74.31, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that CCA’s PE ratio stands at 12.2x while its media peer level trades at 22x, indicating that relative to its competitors, you can purchase CCA’s stock for a lower price right now. CCA is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to equity ratio of 159% has been falling over time, signalling its capacity to pay down its debt. Dig deeper into Cogeco Communications here. TSX:CCA PE PEG Gauge Feb 14th 18
SDX Energy Inc. (TSXV:SDX)
SDX Energy Inc. engages in the exploration, development, and production of oil and gas primarily in Egypt and Morocco. The company employs 21 people and with the stock’s market cap sitting at CAD CA$196.31M, it comes under the small-cap stocks category.
SDX’s shares are currently hovering at around -35% beneath its actual value of $1.34, at a price tag of $0.87, based on my discounted cash flow model. This discrepancy gives us a chance to invest in SDX at a discount. What’s even more appeal is that SDX’s PE ratio stands at around 4x compared to its oil and gas peer level of 14.3x, implying that relative to its competitors, you can buy SDX for a cheaper price. SDX also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. SDX has zero debt on its books as well, meaning it has no long term debt obligations to worry about. More detail on SDX Energy here. TSXV:SDX PE PEG Gauge Feb 14th 18
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.
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