The materials industry is deeply cyclical with producers benefiting highly during an economic boom and many players going bankrupt in a bust. Therefore, this industry is a macroeconomic play with the opportunity of riding the wave in times of robust demand for commodities. Manaksia and Cosmo Films are materials industry companies that are currently trading below what they’re actually worth. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. And those that want more exposure to the economic cycle should consider the following list of potentially undervalued cyclical stocks.
Manaksia Limited (BSE:532932)
Manaksia Limited manufactures and sells packaging, metal, and other products in India and internationally. Manaksia was formed in 1984 and with the stock’s market cap sitting at INR ₹3.49B, it comes under the mid-cap stocks category.
532932’s shares are now floating at around -82% beneath its true level of INR298.31, at a price of ₹53.20, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy 532932 shares at a discount. Furthermore, 532932’s PE ratio is around 3.9x against its its Metals and Mining peer level of, 19.61x indicating that relative to its peers, 532932 can be bought at a cheaper price right now. 532932 is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 11.18%, which has been falling over the past couple of years showing its ability to pay down its debt. Continue research on Manaksia here.
Cosmo Films Limited (BSE:508814)
Cosmo Films Limited engages in the manufacture and sale of bi-axially oriented polypropylene (BOPP), thermal and coated films in India and internationally. Cosmo Films was formed in 1981 and with the market cap of INR ₹5.22B, it falls under the mid-cap stocks category.
508814’s shares are now trading at -16% under its actual value of INR317.79, at a price tag of ₹268.45, based on its expected future cash flows. signalling an opportunity to buy the stock at a low price. Furthermore, 508814’s PE ratio is currently around 7.42x against its its Packaging peer level of, 18.76x indicating that relative to its comparable company group, you can buy 508814 for a cheaper price. 508814 is also strong financially, as short-term assets amply cover upcoming and long-term liabilities. Finally, its debt relative to equity is 119.99%, which has been falling over the past couple of years signifying its ability to reduce its debt obligations year on year. More detail on Cosmo Films here.