Hour Glass and CWG International are two of the stocks I have identified as undervalued. This means their current share prices are trading at levels less than what the companies are 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.
The Hour Glass Limited (SGX:AGS)
The Hour Glass Limited, an investment holding company, retails and distributes watches, jewelry, and other luxury products in South East Asia, Australia, and North East Asia. Hour Glass was founded in 1979 and with the company’s market capitalisation at SGD SGD461.78M, we can put it in the small-cap group.
AGS’s shares are now floating at around -56% less than its actual worth of $1.47, at the market price of $0.66, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. In addition to this, AGS’s PE ratio is around 9.3x relative to its specialty retail peer level of 11.4x, implying that relative to its comparable company group, we can invest in AGS at a lower price. AGS is also robust in terms of financial health, with current assets covering liabilities in the near term and over the long run. It’s debt-to-equity ratio of 10% has been diminishing over the past couple of years showing its capacity to reduce its debt obligations year on year. More on Hour Glass here.
CWG International Ltd. (SGX:ACW)
CWG International Ltd. engages in the development of real estate properties. Started in 2002, and currently headed by CEO Jianrong Qian, the company employs 479 people and with the company’s market capitalisation at SGD SGD128.44M, we can put it in the small-cap category.
ACW’s stock is currently hovering at around -97% below its real value of ¥6.33, at a price tag of ¥0.19, based on my discounted cash flow model. This discrepancy gives us a chance to invest in ACW at a discount. Moreover, ACW’s PE ratio is around 4.4x relative to its real estate peer level of 11.6x, suggesting that relative to its competitors, we can purchase ACW’s shares for cheaper. ACW is also in good financial health, with current assets covering liabilities in the near term and over the long run.
More on CWG International here.
STAR Pharmaceutical Limited (SGX:AYL)
STAR Pharmaceutical Limited, an investment holding company, develops, manufactures, and trades pharmaceutical products for hospitals, clinics, and pharmacies in the People’s Republic of China. STAR Pharmaceutical was founded in 1993 and with the company’s market cap sitting at SGD SGD10.69M, it falls under the small-cap category.