A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for Exco Technologies and Kinder Morgan Canada. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
Exco Technologies Limited (TSX:XTC)
Exco Technologies Limited, together with its subsidiaries, designs, develops, manufactures, and sells dies, molds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Started in 1952, and now led by CEO Brian Robbins, the company employs 6,517 people and with the market cap of CAD CA$411.72M, it falls under the small-cap group.
XTC’s shares are currently trading at -48% below its true value of $18.7, at the market price of $9.7, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy XTC shares at a discount. Additionally, XTC’s PE ratio is trading at around 9.7x relative to its machinery peer level of 20.1x, suggesting that relative to its comparable company group, you can buy XTC’s shares at a cheaper price. XTC is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities.
Kinder Morgan Canada Limited (TSX:KML)
Kinder Morgan Canada Limited engages in the crude oil condensate and refined products transporting, and merchant liquids storage and handling activities in Canada. Founded in 2017, and currently run by Steven Kean, the company provides employment to 439 people and with the company’s market cap sitting at CAD CA$1.75B, it falls under the small-cap group.
KML’s shares are currently trading at -66% under its actual level of $49.12, at a price tag of $16.92, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. Furthermore, KML’s PE ratio is currently around 8x compared to its oil and gas peer level of 15.8x, implying that relative to other stocks in the industry, KML’s shares can be purchased for a lower price. KML is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities.
Zimtu Capital Corp. (TSXV:ZC)
Zimtu Capital Corp. is a private equity and venture capital firm specializing in seed stage, early stage, acquisition, pre-IPO investments in private micro and small-cap resource companies. Zimtu Capital is headed by CEO David Hodge. It currently has a market cap of CAD CA$3.62M placing it in the small-cap stocks category