Companies that are recently trading at a market price lower than their real values include Quanzhou Huixin Micro-Credit and Stella International Holdings. 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.
Quanzhou Huixin Micro-Credit Co., Ltd. (SEHK:1577)
Quanzhou Huixin Micro-credit Co., Ltd., a microfinance company, provides various short-term financing solutions in the People’s Republic of China. Established in 2010, and currently headed by CEO Zhirui Wu, the company currently employs 36 people and with the company’s market capitalisation at HKD HK$897.60M, we can put it in the small-cap category.
1577’s shares are now floating at around -44% less than its actual value of ¥2.35, at the market price of ¥1.32, according to my discounted cash flow model. This discrepancy gives us a chance to invest in 1577 at a discount. Furthermore, 1577’s PE ratio stands at around 7.8x relative to its consumer finance peer level of 8.6x, meaning that relative to its peers, 1577’s shares can be purchased for a lower price. 1577 is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 1577 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Continue research on Quanzhou Huixin Micro-Credit here.
Stella International Holdings Limited (SEHK:1836)
Stella International Holdings Limited develops, manufactures, and retails footwear products and leather goods for men and women. Founded in 1982, and now led by CEO Li-Ming Chen, the company employs 67,000 people and with the stock’s market cap sitting at HKD HK$8.96B, it comes under the mid-cap category.
1836’s stock is now hovering at around -28% less than its true level of $15.72, at a price tag of $11.3, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Furthermore, 1836’s PE ratio stands at around 14.4x relative to its luxury peer level of 14.9x, indicating that relative to its peers, we can purchase 1836’s shares for cheaper. 1836 is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run.