K G Denim and Sparc Systems may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
K G Denim Limited (BSE:500239)
K G Denim Limited manufactures and sells denim and apparel fabrics to fashion brands and retailers worldwide. K G Denim was established in 1992 and with the company’s market capitalisation at INR ₹1.20B, we can put it in the small-cap category.
500239’s shares are now floating at around -63% beneath its value of INR127.71, at the market price of ₹46.85, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Additionally, 500239’s PE ratio is trading at 5.29x compared to its Luxury peer level of, 17.73x indicating that relative to other stocks in the industry, you can purchase 500239’s stock for a lower price right now. 500239 is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 128.01%, which has been declining for the last couple of years showing its ability to reduce its debt obligations year on year. Interested in K G Denim? Find out more here.
Sparc Systems Limited (BSE:531370)
Sparc Systems Limited provides software and hardware electronic security solutions in India. Sparc Systems was formed in 1989 and with the company’s market cap sitting at INR ₹20.29M, it falls under the small-cap group.
531370’s stock is now floating at around -44% lower than its actual level of INR7.42, at a price of ₹4.15, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy 531370 shares at a low price. Also, 531370’s PE ratio is trading at 23.39x relative to its Electronic peer level of, 41.73x indicating that relative to its peers, you can buy 531370 for a cheaper price. 531370 also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 531370 also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. Interested in Sparc Systems? Find out more here.