Companies, such as Trek 2000 International, are deemed to be undervalued because their shares are currently trading below their true values. There’s a few ways you can value a company. 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. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
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 formed in 1999 and with the stock’s market cap sitting at SGD SGD74.26M, it comes under the small-cap stocks category.
5AB’s stock is currently floating at around -87% less than its real value of $1.83, at a price of S$0.23, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Moreover, 5AB’s PE ratio is currently around 9.24x compared to its Tech peer level of, 17.73x indicating that relative to its comparable set of companies, we can invest in 5AB at a lower price. 5AB is also in great financial shape, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 5AB has zero debt on its books as well, meaning it has no long term debt obligations to worry about. Dig deeper into Trek 2000 International here.
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 formed in 2004 and has a market cap of SGD SGD76.00M, putting it in the small-cap group.
B49’s stock is now floating at around -59% under its true value of ¥0.47, at the market price of S$0.19, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. In addition to this, B49’s PE ratio stands at 9.91x while its Machinery peer level trades at, 10.85x implying that relative to its peers, B49’s stock can be bought at a cheaper price. B49 is also in great financial shape, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 3.63% has been dropping over time, demonstrating B49’s capacity to reduce its debt obligations year on year. Dig deeper into World Precision Machinery here.