November Undervalued Stock Picks

Companies, such as Leon’s Furniture, are deemed to be undervalued because their shares are currently trading below their true values. Investors can profit from the difference by investing in these stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.

Leon’s Furniture Limited (TSX:LNF)

Leon’s Furniture Limited, together with its subsidiaries, operates as a retailer of furniture, appliances, and home electronics in Canada. Founded in 1909, and currently run by Terrence Leon, the company now has 8,363 employees and has a market cap of CAD CA$1.43B, putting it in the small-cap group.

LNF’s shares are currently floating at around -40% lower than its intrinsic value of $31.24, at the market price of $18.85, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. What’s even more appeal is that LNF’s PE ratio is currently around 13.7x against its its specialty retail peer level of 23.4x, indicating that relative to other stocks in the industry, we can purchase LNF’s shares for cheaper. LNF also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 45% has over time, revealing its capacity

Equitable Group Inc. (TSX:EQB)

Equitable Group Inc., through its subsidiary, Equitable Bank, provides various financial services to retail and commercial customers in Canada. Started in 1970, and headed by CEO Andrew Moor, the company employs 569 people and with the market cap of CAD CA$1.08B, it falls under the small-cap category.

EQB’s shares are now floating at around -33% below its intrinsic level of $97.99, at a price tag of $65.29, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In addition to this, EQB’s PE ratio is trading at 6.8x while its thrifts and mortgage finance peer level trades at 12.1x, indicating that relative to its comparable company group, we can buy EQB’s stock at a cheaper price today. EQB is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run.

Brampton Brick Limited (TSX:BBL.A)

Brampton Brick Limited, together with its subsidiaries, manufactures and sells masonry and landscape products for residential construction and institutional, commercial, and industrial building projects in Canada and the United States. Established in 1871, and now led by CEO Jeffrey Kerbel, the company employs 303 people and with the company’s market capitalisation at CAD CA$88.34M, we can put it in the small-cap group.

BBL.A’s shares are currently floating at around -28% less than its value of $12.2, at a price tag of $8.73, based on its expected future cash flows. This mismatch signals an opportunity to buy BBL.A shares at a discount. Furthermore, BBL.A’s PE ratio stands at 9.3x against its its construction materials peer level of 24.5x, implying that relative to its peers, we can purchase BBL.A’s shares for cheaper. BBL.A is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 23% has been dropping for the past few years signifying BBL.A’s capacity to pay down its debt.

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.