Stocks, such as Silveroak Commercials and Paragon Finance, are trading at a value below what they may actually be worth. 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.
Silveroak Commercials Limited (BSE:512197)
Silveroak Commercials Limited primarily manufactures electrical products in India. Established in 1985, and currently headed by CEO Tushar Patil, the company size now stands at 38 people and has a market cap of INR ₹13.67M, putting it in the small-cap category.
512197’s shares are now hovering at around -89% less than its intrinsic level of INR44.61, at a price of ₹4.97, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Also, 512197’s PE ratio is trading at around 2.6x relative to its Electrical peer level of, 25.21x meaning that relative to its comparable set of companies, 512197’s shares can be purchased for a lower price. 512197 is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities.
More on Silveroak Commercials here.
Paragon Finance Limited (BSE:531255)
Paragon Finance Limited operates as a non-banking finance company in India. Paragon Finance was started in 1986 and with the market cap of INR ₹80.96M, it falls under the small-cap stocks category.
531255’s shares are now floating at around -65% beneath its true value of INR55.06, at a price of ₹19.05, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Moreover, 531255’s PE ratio is around 3.1x compared to its Consumer Finance peer level of, 28.33x suggesting that relative to its comparable company group, 531255’s stock can be bought at a cheaper price. 531255 is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 20.08%, which has been diminishing over the past couple of years signifying 531255’s capability to reduce its debt obligations year on year. Dig deeper into Paragon Finance here.
Rungta Irrigation Limited (BSE:530449)
Rungta Irrigation Limited designs, manufactures, assembles, and markets pipe-based sprinkler irrigation systems in India. Rungta Irrigation was founded in 1986 and with the market cap of INR ₹215.20M, it falls under the small-cap group.