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Virgin Money Holdings (UK) and Arrow Global Group are companies that are currently trading below what they’re actually worth. 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.
Virgin Money Holdings (UK) plc (LSE:VM.)
Virgin Money Holdings (UK) plc engages in the retail banking business primarily in the United Kingdom. Formed in 1995, and currently run by Jayne-Anne Gadhia, the company employs 3,290 people and with the market cap of GBP £1.39B, it falls under the small-cap stocks category.
VM.’s stock is currently floating at around -37% lower than its value of £4.97, at the market price of UK£3.12, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. In terms of relative valuation, VM.’s PE ratio is trading at around 8.26x while its Banks peer level trades at, 15.79x suggesting that relative to other stocks in the industry, you can purchase VM.’s stock for a lower price right now. VM. is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Continue research on Virgin Money Holdings (UK) here.
Arrow Global Group PLC (LSE:ARW)
Arrow Global Group PLC, together with its subsidiaries, identifies, acquires, and manages secured and unsecured defaulted loan portfolios consisting of consumer and SME accounts from financial institutions, such as banks and credit card companies in the United Kingdom and mainland Europe. Formed in 2005, and headed by CEO Lee Rochford, the company size now stands at 1,500 people and with the market cap of GBP £636.85M, it falls under the small-cap category.
ARW’s stock is currently trading at -61% less than its intrinsic value of £9.35, at a price of UK£3.64, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. What’s even more appeal is that ARW’s PE ratio stands at around 15.93x while its index peer level trades at, 17.49x meaning that relative to its competitors, we can purchase ARW’s shares for cheaper. ARW is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 480.42% has been diminishing for the past few years showing its capacity to pay down its debt. Dig deeper into Arrow Global Group here.