A favourable economic condition has been a large driver of growth for companies in the materials industry. Hence an eye toward macroeconomic factors, such as demand for commodities, is necessary when investing in the materials sector. Trans-Siberian Gold and Forterra are materials industry companies that are currently trading below what they’re actually worth. There’s a few ways you can measure the value of a cyclical 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.

Trans-Siberian Gold plc (AIM:TSG)

Trans-Siberian Gold plc, together with its subsidiaries, engages in the exploration, development, and production of gold and silver properties in Russia. Established in 2000, and run by CEO Dmitry Khilov, the company now has 676 employees and with the stock’s market cap sitting at GBP £42.92M, it comes under the small-cap stocks category.

TSG’s shares are now floating at around -78% beneath its value of $1.78, at the market price of UK£0.39, based on its expected future cash flows. The discrepancy signals an opportunity to buy low.

TSG is also strong financially, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 21.41% has been reducing over time, indicating its capability to pay down its debt. Interested in Trans-Siberian Gold? Find out more here.

Forterra plc (LSE:FORT)

Forterra plc manufactures and sells masonry products in the United Kingdom. The company currently employs 1548 people and with the company’s market capitalisation at GBP £592.00M, we can put it in the small-cap group.

FORT’s shares are now floating at around -46% lower than its intrinsic level of £5.46, at a price of UK£2.96, based on my discounted cash flow model. This mismatch indicates a chance to invest in FORT at a discounted price. Furthermore, FORT’s PE ratio is trading at 12.46x relative to its Basic Materials peer level of, 19.43x suggesting that relative to its peers, we can invest in FORT at a lower price. FORT is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run.

More detail on Forterra here.

Anglo American plc (LSE:AAL)

Anglo American plc, together with its subsidiaries, engages in exploring, mining, and processing various metals and minerals worldwide. Established in 1917, and now run by Mark Cutifani, the company employs 69,000 people and with the company’s market capitalisation at GBP £23.25B, we can put it in the large-cap stocks category.