Cortina Holdings and Multi-Chem are stocks on my list that are potentially undervalued. This means their current share prices are trading well-below what the companies are actually worth. There’s a few ways you can value a company. 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. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
Cortina Holdings Limited (SGX:C41)
Cortina Holdings Limited, an investment holding company, engages in the retail and distribution of timepieces and accessories in Singapore, Malaysia, Thailand, Indonesia, Hong Kong, Taiwan, and Russia. Cortina Holdings was established in 1972 and has a market cap of SGD SGD129.15M, putting it in the small-cap stocks category.
C41’s stock is currently hovering at around -67% lower than its intrinsic value of $2.38, at the market price of $0.78, based on my discounted cash flow model. This mismatch indicates a chance to invest in C41 at a discounted price. Also, C41’s PE ratio is trading at 8.5x against its its specialty retail peer level of 11.4x, suggesting that relative to its comparable company group, we can buy C41’s stock at a cheaper price today. C41 is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 43%, which has been dropping for the past few years demonstrating its capability to pay down its debt. More detail on Cortina Holdings here.
Multi-Chem Limited (SGX:AWZ)
Multi-Chem Limited, an investment holding company, distributes hardware and software related to Internet and network products in Singapore, the People’s Republic of China, and internationally. Started in 1985, and run by CEO Suan Sai Foo, the company provides employment to 921 people and with the market cap of SGD SGD76.58M, it falls under the small-cap group.
AWZ’s shares are currently trading at -55% less than its actual value of $1.9, at the market price of $0.85, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Also, AWZ’s PE ratio stands at 7.6x against its its electronic peer level of 10.8x, meaning that relative to its competitors, we can purchase AWZ’s shares for cheaper. AWZ is also strong in terms of its financial health, with current assets covering liabilities in the near term and over the long run. Finally, its debt relative to equity is 26%, which has been dropping over time, signifying AWZ’s capacity to reduce its debt obligations year on year. More detail on Multi-Chem here.