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Undervalued companies are those that trade at a price lower than their actual values, such as Trinity Mirror and InterQuest Group. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Trinity Mirror plc (LSE:TNI)
Trinity Mirror plc produces and distributes content through newspapers and associated digital platforms in the United Kingdom, the Republic of Ireland, Continental Europe, and internationally. Started in 1832, and now run by Simon Fox, the company size now stands at 4,775 people and with the stock’s market cap sitting at GBP £253.09M, it comes under the small-cap stocks category.
TNI’s stock is currently trading at -74% less than its intrinsic value of £3.29, at a price of UK£0.86, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. What’s even more appeal is that TNI’s PE ratio stands at 3.72x while its Media peer level trades at, 20.98x meaning that relative to its comparable company group, TNI can be bought at a cheaper price right now. TNI is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 3.75%, which has been declining over time, revealing its capability to reduce its debt obligations year on year. Continue research on Trinity Mirror here.
InterQuest Group plc (AIM:ITQ)
InterQuest Group PLC, together with its subsidiaries, provides contract and permanent recruitment services in the United Kingdom and the United States. Started in 2001, and run by CEO Chris Eldridge, the company provides employment to 297 people and with the company’s market capitalisation at GBP £10.28M, we can put it in the small-cap stocks category.
ITQ’s stock is now trading at -74% beneath its true level of £0.75, at the market price of UK£0.20, based on my discounted cash flow model. The divergence signals an opportunity to buy ITQ shares at a low price. Furthermore, ITQ’s PE ratio stands at around 13.38x while its Professional Services peer level trades at, 18.26x implying that relative to its comparable set of companies, ITQ can be bought at a cheaper price right now. ITQ is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run.