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The fortunes of financial services companies often follow that of the broader economy, mainly because these businesses provide services such as consumer financing and investment banking, which tend to do well when times are good. Currently, Garda Capital Group and Katana Capital are financial companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. Investors can profit from the difference by investing in these financial 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.
Garda Capital Group (ASX:GCM)
Garda Capital Group is headed by CEO Matthew Madsen. With the company’s market capitalisation at AUD A$26.43M, we can put it in the small-cap category
GCM’s stock is currently floating at around -43% beneath its actual worth of $1.94, at a price tag of AU$1.10, based on its expected future cash flows. This mismatch indicates a chance to invest in GCM at a discounted price. Furthermore, GCM’s PE ratio is currently around 8.6x compared to its Capital Markets peer level of, 18.56x implying that relative to its competitors, GCM’s stock can be bought at a cheaper price. GCM is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Dig deeper into Garda Capital Group here.
Katana Capital Limited (ASX:KAT)
Katana Capital Limited is a self management investment trust. Katana Capital was founded in 2005 and has a market cap of AUD A$33.33M, putting it in the small-cap category.
KAT’s stock is now floating at around -34% below its true level of $1.16, at the market price of AU$0.77, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. In terms of relative valuation, KAT’s PE ratio is trading at 8.6x while its Capital Markets peer level trades at, 18.56x indicating that relative to its comparable set of companies, KAT can be bought at a cheaper price right now. KAT is also strong financially, as current assets can cover liabilities in the near term and over the long run. KAT also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in Katana Capital? Find out more here.
K2 Asset Management Holdings Ltd (ASX:KAM)
K2 Asset Management Holdings Ltd. is a privately owned investment manager. Formed in 1999, and currently run by Campbell Neal, the company now has 21 employees and with the company’s market capitalisation at AUD A$40.87M, we can put it in the small-cap category.