Recent undervalued companies based on their current market price include Pro-Dex and SandRidge Energy. 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.
Pro-Dex, Inc. (NASDAQ:PDEX)
Pro-Dex, Inc., together with its subsidiaries, designs, develops, and manufactures powered surgical instruments for medical device original equipment manufacturers, dental instruments, and rotary air motors worldwide. Started in 1978, and now run by Richard Van Kirk, the company size now stands at 76 people and has a market cap of USD $30.31M, putting it in the small-cap category.
PDEX’s shares are currently hovering at around -47% below its actual value of $13.1, at a price tag of $6.95, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Moreover, PDEX’s PE ratio is currently around 5.4x while its medical equipment peer level trades at 35.5x, meaning that relative to its comparable set of companies, you can buy PDEX for a cheaper price. PDEX also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. PDEX also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility.
SandRidge Energy, Inc. (NYSE:SD)
SandRidge Energy, Inc., an oil and natural gas company, engages in the exploration, development, and production of oil, natural gas, and natural gas liquids primarily in the Mid-Continent and Rockies regions of the United States. The company size now stands at 509 people and with the company’s market capitalisation at USD $619.32M, we can put it in the small-cap stocks category.
SD’s shares are now floating at around -88% beneath its true level of $149.34, at a price of $18.12, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. In addition to this, SD’s PE ratio is trading at around 0.2x while its oil and gas peer level trades at 14.7x, suggesting that relative to its competitors, SD can be bought at a cheaper price right now. SD is also strong financially, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 4% has been dropping over the past couple of years signalling its capability to reduce its debt obligations year on year.