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Companies with shares trading at a market price below what they are actually worth, such as Hua Hong Semiconductor and Shandong Weigao Group Medical Polymer, are deemed undervalued. Investors can profit from the difference by investing in these stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Hua Hong Semiconductor Limited (SEHK:1347)
Hua Hong Semiconductor Limited, an investment holding company, focuses on the research and manufacturing of semiconductors on 200mm wafers for specialty applications. Established in 1997, and currently lead by Yu Wang, the company employs 3,938 people and with the stock’s market cap sitting at HKD HK$13.60B, it comes under the large-cap group.
1347’s shares are currently hovering at around -22% less than its true level of $16.69, at the market price of $13.08, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy 1347 shares at a low price. Moreover, 1347’s PE ratio is around 11.9x against its its semiconductor peer level of 15.4x, implying that relative to its competitors, we can invest in 1347 at a lower price. 1347 is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 5%, which has been declining for the past few years demonstrating 1347’s capability to reduce its debt obligations year on year. Dig deeper into Hua Hong Semiconductor here.
Shandong Weigao Group Medical Polymer Company Limited (SEHK:1066)
Shandong Weigao Group Medical Polymer Company Limited engages in the research and development, production, export, and sale of medical devices under the Jierui and Wego Ortho brands in the People’s Republic of China and internationally. Formed in 2000, and currently lead by Yi Wang, the company size now stands at 10,693 people and with the market cap of HKD HK$22.48B, it falls under the large-cap group.
1066’s stock is now trading at -41% below its intrinsic value of ¥8.47, at a price of ¥4.97, according to my discounted cash flow model. This discrepancy gives us a chance to invest in 1066 at a discount. Also, 1066’s PE ratio stands at 13.1x against its its medical equipment peer level of 19.9x, suggesting that relative to other stocks in the industry, we can buy 1066’s stock at a cheaper price today. 1066 is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities.