Recent undervalued companies based on their current market price include Pets at Home Group and Hikma Pharmaceuticals. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Pets at Home Group Plc (LSE:PETS)
Pets at Home Group Plc, through its subsidiaries, operates as a specialist retailer of pet food, pet related products, and pet accessories in the United Kingdom. Established in 1991, and headed by CEO Ian Kellett, the company employs 6,811 people and with the company’s market capitalisation at GBP £818.50M, we can put it in the small-cap group.
PETS’s stock is now trading at -20% less than its true value of £2.06, at a price of £1.64, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. In terms of relative valuation, PETS’s PE ratio stands at around 11.4x compared to its specialty retail peer level of 13.1x, suggesting that relative to its competitors, you can buy PETS for a cheaper price. PETS is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to equity ratio of 23% has been dropping over time, showing PETS’s ability to pay down its debt.
Hikma Pharmaceuticals PLC (LSE:HIK)
Hikma Pharmaceuticals PLC develops, manufactures, and markets a range of generic, branded, and in-licensed pharmaceutical products in solid, semi-solid, liquid, and injectable final dosage forms worldwide. Started in 1978, and headed by CEO Said Darwazah, the company provides employment to 8,500 people and with the company’s market capitalisation at GBP £2.58B, we can put it in the mid-cap group.
HIK’s stock is now hovering at around -43% lower than its real value of $18.72, at a price of $10.74, according to my discounted cash flow model. The divergence signals an opportunity to buy HIK shares at a low price. What’s even more appeal is that HIK’s PE ratio stands at around 20.7x relative to its pharmaceuticals peer level of 25.7x, meaning that relative to its comparable company group, we can purchase HIK’s shares for cheaper. HIK is also in great financial shape, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 36% has been declining for the past few years demonstrating its capacity to reduce its debt obligations year on year.