Recent undervalued companies based on their current market price include 3i Group and Gulf Keystone Petroleum. 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.
3i Group plc (LSE:III)
3i Group plc is a private equity firm specializing in direct and fund of fund investments. Founded in 1945, and now led by CEO Simon Borrows, the company provides employment to 241 people and with the stock’s market cap sitting at GBP £8.63B, it comes under the mid-cap stocks category.
III’s stock is currently hovering at around -30% below its actual value of £12.87, at a price tag of £9.02, according to my discounted cash flow model. This discrepancy gives us a chance to invest in III at a discount. Furthermore, III’s PE ratio is currently around 7.2x against its its capital markets peer level of 17.9x, meaning that relative to its comparable set of companies, we can purchase III’s shares for cheaper. III is also in good financial health, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 9% has been falling for the last couple of years showing its capability to reduce its debt obligations year on year.
Gulf Keystone Petroleum Limited (LSE:GKP)
Gulf Keystone Petroleum Limited engages in the exploration, evaluation, and production of oil and gas properties in the Kurdistan Region of Iraq, the Republic of Algeria, and the United Kingdom. Started in 2001, and now run by Jón Ferrier, the company size now stands at 309 people and with the company’s market cap sitting at GBP £222.93M, it falls under the small-cap stocks category.
GKP’s shares are currently trading at -77% less than its real value of $4.28, at a price tag of $0.97, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. Also, GKP’s PE ratio is trading at 1x compared to its oil and gas peer level of 24.1x, meaning that relative to other stocks in the industry, GKP’s stock can be bought at a cheaper price. GKP also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run.
United Carpets Group PLC (AIM:UCG)
United Carpets Group plc, through its subsidiaries, engages in the carpet and bed retailing business in the United Kingdom. Started in 2004, and headed by CEO Paul Eyre, the company employs 85 people and with the company’s market capitalisation at GBP £7.53M, we can put it in the small-cap stocks category.