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Financial service companies’ profitability tends to be tied to the economic cycle, since these businesses offer services ranging from investment banking to consumer financing, which are in demand during prosperous economic times. Currently, CL Group (Holdings) and Emperor Capital Group are financial companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. Investors can profit from the difference by investing in these financial 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.
CL Group (Holdings) Limited (SEHK:8098)
CL Group (Holdings) Limited, an investment holding company, provides various financial services in the People’s Republic of China. The company currently employs 22 people and with the company’s market cap sitting at HKD HK$231.00M, it falls under the small-cap category.
8098’s stock is now trading at -29% below its value of $0.15, at a price tag of HK$0.10, according to my discounted cash flow model. The discrepancy signals an opportunity to buy low. Furthermore, 8098’s PE ratio stands at around 11.64x relative to its Capital Markets peer level of, 12.75x indicating that relative to its comparable company group, we can invest in 8098 at a lower price. 8098 is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Dig deeper into CL Group (Holdings) here.
Emperor Capital Group Limited (SEHK:717)
Emperor Capital Group Limited, an investment holding company, provides a range of financial services in Hong Kong, the United States, and internationally. Founded in 1993, and currently headed by CEO Daisy Yeung, the company provides employment to 183 people and with the company’s market capitalisation at HKD HK$4.04B, we can put it in the mid-cap group.
717’s shares are now hovering at around -41% lower than its actual value of $1.02, at a price tag of HK$0.60, based on its expected future cash flows. The divergence signals an opportunity to buy 717 shares at a low price. In addition to this, 717’s PE ratio stands at 6.02x compared to its Capital Markets peer level of, 12.75x indicating that relative to its comparable set of companies, 717’s shares can be purchased for a lower price. 717 is also strong financially, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.