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Undervalued companies, such as Hour Glass and HL Global Enterprises, are those that trade at a price below their actual values. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
The Hour Glass Limited (SGX:AGS)
The Hour Glass Limited, an investment holding company, retails and distributes watches, jewelry, and other luxury products in South East Asia, Australia, and North East Asia. The company was established in 1979 and with the company’s market cap sitting at SGD SGD472.36M, it falls under the small-cap stocks category.
AGS’s stock is currently trading at -54% beneath its intrinsic level of $1.47, at a price of S$0.67, based on my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Additionally, AGS’s PE ratio stands at around 9.32x while its Specialty Retail peer level trades at, 10.32x meaning that relative to other stocks in the industry, you can purchase AGS’s stock for a lower price right now. AGS is also in great financial shape, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 10.26% has been falling over the past couple of years revealing AGS’s capacity to pay down its debt. More detail on Hour Glass here.
HL Global Enterprises Limited (SGX:AVX)
HL Global Enterprises Limited, an investment holding company, operates and manages hotels and restaurants in Malaysia and the People’s Republic of China. HL Global Enterprises was founded in 1961 and with the company’s market cap sitting at SGD SGD47.89M, it falls under the small-cap group.
AVX’s shares are now hovering at around -39% lower than its actual level of $0.84, at the market price of S$0.51, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Additionally, AVX’s PE ratio is trading at 0.56x compared to its Hospitality peer level of, 23.61x indicating that relative to other stocks in the industry, AVX’s stock can be bought at a cheaper price. AVX also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run. It’s debt-to-equity ratio of 3.05% has been dropping over the past couple of years demonstrating AVX’s capacity to pay down its debt. Interested in HL Global Enterprises? Find out more here.