Best Undervalued Stock Picks

Stocks, such as NNK Group and China Shenghai Food Holdings, are trading at a value below what they may actually be worth. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.

NNK Group Limited (SEHK:3773)

NNK Group Limited provides mobile top-up services to mobile subscribers in the People’s Republic of China. Founded in 2006, and headed by CEO Hua Yang, the company currently employs 146 people and with the company’s market cap sitting at HKD HK$298.80M, it falls under the small-cap group.

3773’s shares are now trading at -62% below its intrinsic level of ¥1.91, at the market price of ¥0.72, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Furthermore, 3773’s PE ratio stands at around 14.3x compared to its internet peer level of 28.7x, indicating that relative to its comparable set of companies, we can purchase 3773’s shares for cheaper. 3773 is also a financially healthy company, as current assets can cover liabilities in the near term and over the long run.

More detail on NNK Group here.

SEHK:3773 PE PEG Gauge Jan 17th 18
SEHK:3773 PE PEG Gauge Jan 17th 18

China Shenghai Food Holdings Company Limited (SEHK:1676)

China Shenghai Food Holdings Company Limited, an investment holding company, engages in the packaging and sale of seafood products in the Peoples’ Republic of China. Established in 2005, and currently lead by Dehua Jiang, the company currently employs 424 people and has a market cap of HKD HK$560.00M, putting it in the small-cap stocks category.

1676’s stock is currently trading at -71% under its true value of ¥1.96, at the market price of ¥0.56, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Also, 1676’s PE ratio is trading at 4.5x compared to its food peer level of 21.2x, indicating that relative to its competitors, we can buy 1676’s stock at a cheaper price today. 1676 is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. 1676 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on China Shenghai Food Holdings here.

SEHK:1676 PE PEG Gauge Jan 17th 18
SEHK:1676 PE PEG Gauge Jan 17th 18

Anhui Expressway Company Limited (SEHK:995)

Anhui Expressway Company Limited invests in, constructs, operates, manages, and develops toll roads and associated service sections in the Anhui Province. Formed in 1996, and run by CEO Zhen Xu, the company now has 2,692 employees and with the stock’s market cap sitting at HKD HK$18.72B, it comes under the large-cap category.