Yahoo Finance Best Cheap Stock in June
Pacific Coast Oil Trust and SkyWest may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. 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.
Pacific Coast Oil Trust (NYSE:ROYT)
Pacific Coast Oil Trust acquires and holds net profits and royalty interests in various oil and natural gas properties located in California. Pacific Coast Oil Trust was started in 2012 and has a market cap of USD $77.17M, putting it in the small-cap stocks category.
ROYT’s shares are now floating at around -35% beneath its actual worth of $3.12, at the market price of US$2.02, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy ROYT shares at a low price. In terms of relative valuation, ROYT’s PE ratio is around 10.52x relative to its Oil and Gas peer level of, 13.22x indicating that relative to other stocks in the industry, ROYT’s shares can be purchased for a lower price. ROYT is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. ROYT also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on Pacific Coast Oil Trust here.
SkyWest, Inc. (NASDAQ:SKYW)
SkyWest, Inc., through its subsidiaries, operates a regional airline in the United States. Formed in 1972, and now led by CEO Russell Childs, the company now has 16,300 employees and with the company’s market cap sitting at USD $2.98B, it falls under the mid-cap group.
SKYW’s stock is now floating at around -48% under its actual value of $108.86, at a price tag of US$56.65, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Additionally, SKYW’s PE ratio is trading at around 6.55x against its its Airlines peer level of, 10.46x indicating that relative to its competitors, we can purchase SKYW’s shares for cheaper. SKYW is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities.
Dig deeper into SkyWest here.
Janus Henderson Group plc (NYSE:JHG)
Janus Henderson Group plc is an asset management holding entity. Founded in 1934, and run by CEO Andrew Formica, the company size now stands at 2,356 people and has a market cap of USD $6.17B, putting it in the mid-cap category.
JHG’s shares are now trading at -24% beneath its intrinsic value of $42.22, at the market price of US$32.03, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy JHG shares at a discount. In addition to this, JHG’s PE ratio is currently around 7.71x relative to its Capital Markets peer level of, 16.1x implying that relative to other stocks in the industry, we can buy JHG’s stock at a cheaper price today. JHG also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 6.43% has been diminishing over the past couple of years demonstrating its ability to pay down its debt. Interested in Janus Henderson Group? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, explore this 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.
