From my watch list, these three companies are undervalued based on the Peter Lynch Price Value.
1)ChicagoBridge & Iron (CBI)
Description: The Company provides conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services to customers in the energy infrastructure market throughout the world, and is a provider of diversified government services.
Ratios: CBI has a ROC of about 117%, a ROA of 6% and a ROE of 24%. All ratios are at the top of all time for CBI and there is a growing trend over the past 6 years.
Compared to the CBI industry sector, these ratios are better then 95% of other Global Engineering & Construction competitors
Financials: The company has a financial situation that has to be taken under control. Cash to debt ratio is 0.12, and compared to its past, it is at its worst level. Interest Coverage is fine and the compared to industry sector competitors is at an average level.
Growth: Over the last five years, the company had a steady and strong growth rate (per share).
| Revenue | +22% | |
| EBITDA | +19% | |
| Free Cash Flow | +6% | |
| BookValue | +23% | |
| EPS | +22% |
Price: The stock is trading at about $40. The Peter Lynch value gives a price of $92. The stock is undervalued by more then 50%. The DCF value gives a price of $79.
Currently, the price is facing a long lasting down-trend that started in April 2014. Down 55% from its 52-week high and up 8% from its 52-week low.
The 200-days Moving Average price is $62
Technically, there is a double-bottom at $37. After a break of this level, the price will go on with this downtrend. Uptrend may start if the price will break $43.50.
Dividend Yield: CBI has a small dividend yield of 0.70%. Not suggested for passive income investors
2) Geospace Technologies Corp (GEOS)
Description: The Company designs, manufactures and distributes thermal imaging equipment and thermal media products targeted at the screen print, point of sale, signage and textile market sectors. It also designs and manufactures other industrial products, including thermal printing equipment and film.
Ratios: Geospace Technologies has top ratios of Global Scientific & Technical Instruments industry, which are better then 80% of competitors. The current situation is not the best in this company's history, but all is at a double-digit value. A ROC of 20%, a Return on Equity of 11% and a Return on Assets of 10%.
Financials: The company has no debts and a financial Strength of 8 out of 10.
Growth: Over the last five years, the company had a steady growth rate (per share).
| Revenue | +17% | |
| EBITDA | +30% | |
| BookValue | +23% | |
| EPS | +75% |
Price: The stock is trading at about $24. The Peter Lynch chart gives a price of $70. The DCF value gives a price of $79.
Currently, the price is down 72% from its 52-week high and up 5% from its 52-week low.
The price has been on a downward trend since November 2013 but the price is all testing the down-trend line. So is worth to keep an eye open for possible jumps. The problem looks like to be just the price.
3)TransGlobe Energy Corp (TGA)
Description:The Company changed its name to TransGlobe Energy Corporation on April 2, 1996 and on June 9, 2004, the Company continued from the Province of British Columbia to the Province of Alberta pursuant to the ABCA. The Company is an oil and gas engaged in the exploration, development and production of crude oil and natural gas.
Ratios: TransGlobe Energy Corp has strong and steady ratios. A ROC of 30%, a Return on Equity of 13% and a Return on Assets of 10%.
These levels are better then 95% of other Global Oil & Gas E&P competitors.
Compared to its history, these levels are at an average position.
Financials: The company has a Cash To Debt of 0.94 and a financial strength of 7 out of 10.
Growth: Over the last five years, the company had an amazing growth rate (per share).
| Revenue | +57% | |
| EBITDA | +28% | |
| BookValue | +31% |
Price: The stock is trading at about $3. The Peter Lynch value gives a price of $18. The DCF value gives a price of $12.
Currently, the price is down 64% from its 52-week high and up 12% from its 52-week low.
The average price of the last 200 days is at $5.80.
Technically, the down trend lasts since 2010 and even here is just a matter of fluctuation of price. We have to wait the right time to enter, a good reversal pattern. There are no doubts the company is good.
Dividend Yeld: TGA has an amazing dividend yeld of 4.95% that is growing with very few pauses
Summarizing the 3 stocks:
| CBI | GEOS | TGA | |
| ROC | 117% | 20% | 30% |
| ROA | 6% | 11% | 13% |
| ROE | 24% | 10% | 10% |
| Compared to Industry (better then) | 95% | 80% | 95% |
| Cash to Debt | 0.12 | No Debts | 0.94 |
| Revenue Growth (5y) | 57% | 22% | 57% |
| EBITDA Growth (5y) | 38% | 19% | 28% |
| BookValue Growth (5y) | 21% | 23% | 31% |
| Current Price | 40$ | 24$ | 3$ |
| Peter-Lynch Price | 92$ (+130%) | 70$ (+191%) | 18$ (+500%) |
| DCF Price | 79$ (+97%) | 79$ (+229%) | 12$ (+300%) |
| 52-Weeks High | -55% | -72% | -64% |
| 52-Weeks Low | +8% | +5% | +12% |
| Trend | Down | Down | Down |
| Dividend Yeld | 0,70% | N/A | 4,95% |
Take a look at all 3 companies, but of course I would take a closer look at TGA, not just because of the price and potential estimated price the stock should have now, but also for the dividend yield.
These 3 companies are all facing a strong downtrend, so the only problem is to find a good time to open a position. It may takes weeks, months… but for sure is worth to put all them into our watching list.
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