Companies with shares trading at a market price below what they are actually worth, such as Fastforward Innovations and Goldplat, are deemed undervalued. 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.
Fastforward Innovations Limited (AIM:FFWD)
Fastforward Innovations Limited is a venture capital firm specializing in early stage investments. Fastforward Innovations is currently run by Lorne Abony. With the stock’s market cap sitting at GBP £19.07M, it comes under the small-cap group
FFWD’s stock is currently hovering at around -35% below its actual worth of £0.22, at a price of £0.14, based on its expected future cash flows. This mismatch signals an opportunity to buy FFWD shares at a discount. Furthermore, FFWD’s PE ratio stands at 8.2x compared to its capital markets peer level of 17.3x, suggesting that relative to its comparable company group, you can buy FFWD’s shares at a cheaper price. FFWD is also strong in terms of its financial health, with current assets covering liabilities in the near term and over the long run. FFWD also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.
Goldplat PLC (AIM:GDP)
Goldplat PLC engages in gold and other precious metals recovery operations in South Africa and Ghana. Established in 2005, and currently lead by Gerard Kisbey-Green, the company currently employs 545 people and has a market cap of GBP £12.98M, putting it in the small-cap group.
GDP’s stock is now floating at around -60% below its actual value of £0.19, at a price of £0.08, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. What’s even more appeal is that GDP’s PE ratio stands at 9.6x while its metals and mining peer level trades at 13.1x, meaning that relative to its competitors, you can buy GDP for a cheaper price. GDP is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run.
DFS Furniture plc (LSE:DFS)
DFS Furniture plc designs, manufactures, sells, delivers, installs, and retails a range of sofas, upholstered furniture, and other living room furniture products. Founded in 1969, and now run by Ian Filby, the company size now stands at 4,200 people and with the stock’s market cap sitting at GBP £414.85M, it comes under the small-cap group.