Companies that are recently trading at a market price lower than their real values include Aeorema Communications and Taptica International. 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.
Aeorema Communications plc (AIM:AEO)
Aeorema Communications plc, a live events agency, engages in devising and delivering corporate communication solutions in the United Kingdom, Europe, and internationally. Established in 2001, and currently run by Steven Quah, the company size now stands at 20 people and with the company’s market capitalisation at GBP £2.72M, we can put it in the small-cap group.
AEO’s stock is currently floating at around -73% less than its true level of £1.13, at a price of £0.3, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. In terms of relative valuation, AEO’s PE ratio is currently around 12.8x compared to its media peer level of 23.5x, indicating that relative to its peers, AEO’s shares can be purchased for a lower price. AEO is also in good financial health, as current assets can cover liabilities in the near term and over the long run. AEO also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.
Taptica International Ltd (AIM:TAP)
Taptica International Ltd., together with its subsidiaries, operates a mobile advertising platform. Started in 2007, and currently headed by CEO Hagai Tal, the company employs 122 people and with the company’s market cap sitting at GBP £247.97M, it falls under the small-cap stocks category.
TAP’s stock is currently floating at around -42% under its intrinsic level of $6.83, at a price of $3.98, based on my discounted cash flow model. The divergence signals an opportunity to buy TAP shares at a low price. Moreover, TAP’s PE ratio is trading at around 16.8x compared to its media peer level of 23.5x, suggesting that relative to other stocks in the industry, you can buy TAP for a cheaper price. TAP also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run. TAP has zero debt on its books as well, meaning it has no long term debt obligations to worry about.
IDOX plc (AIM:IDOX)
Idox plc, through its subsidiaries, develops and supplies software solutions and information services for the management of local governments and other organizations worldwide. Started in 2000, and headed by CEO Andrew Riley, the company size now stands at 894 people and has a market cap of GBP £143.75M, putting it in the small-cap category.