Adairs and Dark Horse Resources are two of the companies on my list that I consider are undervalued. Investors can benefit from buying these companies while they are discounted, because they gain when the market prices move towards the stocks’ true values. Below is a list of stocks I’ve compiled that are deemed undervalued based on the latest financial data.
Adairs Limited (ASX:ADH)
Adairs Limited operates as a specialty retailer of homewares and home furnishings in Australia and New Zealand. Established in 1918, and currently lead by Mark Ronan, the company employs 469 people and with the company’s market capitalisation at AUD A$330.09M, we can put it in the small-cap category.
ADH’s stock is currently hovering at around -42% lower than its actual level of $3.41, at a price tag of $1.99, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy ADH shares at a low price. Furthermore, ADH’s PE ratio is trading at 15.7x while its specialty retail peer level trades at 16.1x, indicating that relative to its peers, we can invest in ADH at a lower price. ADH is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to equity ratio of 42% has been dropping over time, indicating ADH’s capacity to reduce its debt obligations year on year. Interested in Adairs? Find out more here.
Dark Horse Resources Limited (ASX:DHR)
Dark Horse Resources Limited engages in the exploration and development of mineral resource projects primarily in Argentina. Dark Horse Resources was established in 1995 and with the company’s market cap sitting at AUD A$31.97M, it falls under the small-cap category.
DHR’s stock is now floating at around -67% under its value of $0.06, at a price tag of $0.02, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Furthermore, DHR’s PE ratio is trading at around 4.2x compared to its metals and mining peer level of 14x, meaning that relative to its competitors, we can invest in DHR at a lower price. DHR also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Interested in Dark Horse Resources? Find out more here.
Pacific Energy Limited (ASX:PEA)
Pacific Energy Limited, together with its subsidiaries, develops, builds, operates, and manages electricity generation facilities in Australia. Pacific Energy is run by CEO James de Barran Cullen. With the company’s market capitalisation at AUD A$191.64M, we can put it in the small-cap stocks category