Companies, such as SBS Transit, are deemed to be undervalued because their shares are currently trading below their true values. 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.
SBS Transit Ltd (SGX:S61)
SBS Transit Ltd provides bus and rail public transport services primarily in Singapore. Started in 1992, and now led by CEO Juay Kiat Gan, the company size now stands at 9,882 people and with the company’s market capitalisation at SGD SGD790.28M, we can put it in the small-cap group.
S61’s stock is currently hovering at around -45% less than its actual worth of $4.6, at a price tag of $2.54, based on my discounted cash flow model. This mismatch indicates a chance to invest in S61 at a discounted price. In addition to this, S61’s PE ratio is currently around 18.7x compared to its transportation peer level of 19x, meaning that relative to its peers, S61’s stock can be bought at a cheaper price. S61 is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. The stock’s debt-to equity ratio of 49% has been dropping for the last couple of years demonstrating S61’s capability to reduce its debt obligations year on year. Dig deeper into SBS Transit here.
Lum Chang Holdings Limited (SGX:L19)
Lum Chang Holdings Limited, an investment holding company, engages in the construction, project management, and property development and investment activities in Singapore, Malaysia, and the United Kingdom. The company was established in 1982 and with the company’s market capitalisation at SGD SGD147.00M, we can put it in the small-cap category.
L19’s stock is currently floating at around -38% less than its actual value of $0.63, at a price tag of $0.39, based on its expected future cash flows. This mismatch indicates a chance to invest in L19 at a discounted price. In addition to this, L19’s PE ratio is around 7.2x compared to its construction peer level of 10.4x, implying that relative to its competitors, we can purchase L19’s shares for cheaper. L19 is also in good financial health, with current assets covering liabilities in the near term and over the long run.
Interested in Lum Chang Holdings? Find out more here.
Brook Crompton Holdings Ltd. (SGX:AWC)
Brook Crompton Holdings Ltd., an investment holding company, distributes electric motors. Brook Crompton Holdings was formed in 1947 and with the company’s market cap sitting at SGD SGD25.18M, it falls under the small-cap category.