Companies, such as Trading Emissions, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can determine how much a company is actually worth. 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. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Trading Emissions PLC (AIM:TRE)
Trading Emissions PLC is a private equity firm specializing in investments in environmental and emissions assets. Trading Emissions was started in 2005 and with the market cap of GBP £4.37M, it falls under the small-cap group.
TRE’s shares are currently floating at around -82% less than its actual worth of £0.1, at a price tag of £0.02, based on its expected future cash flows. This mismatch indicates a chance to invest in TRE at a discounted price. In addition to this, TRE’s PE ratio is trading at around 2.4x against its its diversified financial services peer level of 13x, meaning that relative to its comparable company group, TRE’s shares can be purchased for a lower price. TRE is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. TRE also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility.
Tandem Group plc (AIM:TND)
Tandem Group plc designs, develops, distributes, and retails sports, leisure, and mobility equipment in the United Kingdom, Europe, and internationally. Started in 1958, and now run by Stephen Grant, the company provides employment to 101 people and has a market cap of GBP £6.03M, putting it in the small-cap category.
TND’s stock is now floating at around -71% lower than its actual level of £4.18, at a price of £1.2, based on its expected future cash flows. The discrepancy signals an opportunity to buy low. What’s even more appeal is that TND’s PE ratio stands at around 5.8x while its leisure products peer level trades at 18.3x, indicating that relative to its comparable company group, TND can be bought at a cheaper price right now. TND is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities. Finally, its debt relative to equity is 69%, which has over time, showing its capability
B.P. Marsh & Partners PLC (AIM:BPM)
B.P. Marsh & Partners PLC is a private equity and venture capital firm specializing in investments in early stage, developmental capital/acquisition capital, startups, management buyouts, management buyins, and hive offs. Formed in 1990, and now run by Alice Foulk, the company size now stands at 17 people and with the company’s market cap sitting at GBP £73.17M, it falls under the small-cap category.