January Top Undervalued Stocks
Companies with shares trading at a market price below what they are actually worth, such as CL Educate and Bannari Amman Sugars, are deemed undervalued. 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.
CL Educate Limited (BSE:540403)
CL Educate Limited engages in the education business. Started in 1996, and run by CEO Gautam Puri, the company size now stands at 376 people and has a market cap of INR ₹4.04B, putting it in the mid-cap group.
540403’s stock is currently floating at around -78% below its value of INR1295.33, at a price tag of INR285.05, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. Additionally, 540403’s PE ratio stands at 29.1x against its its consumer services peer level of 31.2x, meaning that relative to its comparable set of companies, 540403’s stock can be bought at a cheaper price. 540403 is also a financially robust company, with current assets covering liabilities in the near term and over the long run. Finally, its debt relative to equity is 10%, which has been reducing over time, showing 540403’s ability to reduce its debt obligations year on year. Interested in CL Educate? Find out more here.
Bannari Amman Sugars Limited (BSE:500041)
Bannari Amman Sugars Limited primarily produces and sells sugar in India. Started in 1983, and run by CEO B. Saravanan, the company size now stands at 1,880 people and has a market cap of INR ₹28.35B, putting it in the large-cap stocks category.
500041’s stock is now trading at -73% below its true value of INR8318.61, at the market price of INR2260.5, based on my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Moreover, 500041’s PE ratio is currently around 21.3x while its food peer level trades at 24x, indicating that relative to its peers, we can invest in 500041 at a lower price. 500041 is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run.
Interested in Bannari Amman Sugars? Find out more here.
Polyplex Corporation Limited (BSE:524051)
Polyplex Corporation Limited manufactures and sells thin and thick polyester (PET) films primarily for flexible packaging in India and internationally. Established in 1984, and currently lead by Pranay Kothari, the company provides employment to 1,830 people and with the company’s market capitalisation at INR ₹18.39B, we can put it in the large-cap category.
524051’s stock is currently trading at -52% under its intrinsic level of INR1203.33, at the market price of INR575, based on its expected future cash flows. The divergence signals an opportunity to buy 524051 shares at a low price. Also, 524051’s PE ratio is trading at around 11.5x against its its chemicals peer level of 24.2x, suggesting that relative to its comparable set of companies, we can buy 524051’s stock at a cheaper price today. 524051 is also a financially healthy company, with current assets covering liabilities in the near term and over the long run. Finally, its debt relative to equity is 19%, which has been dropping over time, signalling its ability to reduce its debt obligations year on year. Dig deeper into Polyplex here.
For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
