Stocks, such as World Precision Machinery, trading at a market price below their true values are considered to be undervalued. 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.

World Precision Machinery Limited (SGX:B49)

World Precision Machinery Limited, an investment holding company, manufactures, distributes, and sells stamping, cutting, and bending machines in the People’s Republic of China. World Precision Machinery was established in 2004 and with the market cap of SGD SGD78.00M, it falls under the small-cap category.

B49’s stock is now hovering at around -65% below its true level of ¥0.55, at a price of S$0.20, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that B49’s PE ratio is around 10.21x compared to its index peer level of, 14.05x suggesting that relative to its competitors, B49’s shares can be purchased for a lower price. B49 is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 3.63% has been diminishing for the past few years signalling its ability to pay down its debt. Dig deeper into World Precision Machinery here.

Trek 2000 International Ltd (SGX:5AB)

Trek 2000 International Ltd, an investment holding company, engages in the research, design, development, and dealing of computer hardware, software, electronic components, and other related products. Trek 2000 International was founded in 1999 and has a market cap of SGD SGD83.95M, putting it in the small-cap group.

5AB’s stock is now hovering at around -86% under its actual level of $1.87, at a price of S$0.26, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy 5AB shares at a discount. In terms of relative valuation, 5AB’s PE ratio is trading at around 10.4x compared to its Tech peer level of, 18.42x suggesting that relative to its competitors, we can invest in 5AB at a lower price. 5AB is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities. 5AB also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More detail on Trek 2000 International here.