Companies that trade at market prices below their actual values, such as Ellipsiz and Raffles United Holdings, are perceived to be undervalued. Investors can profit from the difference by investing in these stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Ellipsiz Ltd (SGX:BIX)
Ellipsiz Ltd, an investment holding company, provides probe card, and distribution and service solutions to the semiconductor and electronics manufacturing industries in Singapore, Malaysia, China, Taiwan, the United States, Japan, Europe, and internationally. Established in 1992, and currently lead by Wen Lum, the company currently employs 1,200 people and has a market cap of SGD SGD96.10M, putting it in the small-cap stocks category.
BIX’s shares are now floating at around -52% below its actual level of $1.2, at the market price of S$0.57, based on my discounted cash flow model. This discrepancy gives us a chance to invest in BIX at a discount. Furthermore, BIX’s PE ratio stands at around 6.21x against its its Semiconductor peer level of, 10.72x indicating that relative to other stocks in the industry, BIX can be bought at a cheaper price right now. BIX is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. BIX also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Dig deeper into Ellipsiz here.
Raffles United Holdings Ltd (SGX:K22)
Raffles United Holdings Ltd., an investment holding company, operates as a stockists, distributor, and retailer of bearings and seals for automotive part dealers, industrial suppliers, hardware dealers, ship chandlers, general trading companies, and original equipment manufacturers. Raffles United Holdings was started in 1956 and with the company’s market cap sitting at SGD SGD26.92M, it falls under the small-cap stocks category.
K22’s shares are now trading at -53% less than its actual value of $0.24, at a price of S$0.12, according to my discounted cash flow model. This mismatch signals an opportunity to buy K22 shares at a discount. What’s even more appeal is that K22’s PE ratio is trading at 7.93x relative to its Trade Distributors peer level of, 21.63x indicating that relative to other stocks in the industry, we can buy K22’s stock at a cheaper price today. K22 is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 44.77% has been diminishing for the last couple of years indicating its capability to pay down its debt. Dig deeper into Raffles United Holdings here.