Yahoo Finance June Undervalued Cyclical Stocks To Invest In
Cyclical businesses are those that offer products considered as luxury items, rather than those of absolute necessity, for example gambling and day spas. Educational Development and Chico’s FAS are cyclical companies that are currently trading below what they’re actually worth. Investors can determine how much a cyclical 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.
Educational Development Corporation (NASDAQ:EDUC)
Educational Development Corporation, a publishing company, operates as a trade co-publisher of the line of educational children’s books in the United States. Established in 1965, and run by CEO Randall White, the company provides employment to 193 people and has a market cap of USD $74.64M, putting it in the small-cap category.
EDUC’s stock is now trading at -68% less than its intrinsic value of $56.71, at a price of US$18.25, according to my discounted cash flow model. This difference in price and value gives us a chance to buy low. Furthermore, EDUC’s PE ratio stands at around 14.31x relative to its Retail Distributors peer level of, 17.28x implying that relative to its comparable set of companies, we can invest in EDUC at a lower price. EDUC also has a healthy balance sheet, with near-term assets able to cover upcoming and long-term liabilities.
Continue research on Educational Development here.
Chico’s FAS, Inc. (NYSE:CHS)
Chico’s FAS, Inc. operates as an omni-channel specialty retailer of women’s private branded, casual-to-dressy clothing, intimates, and complementary accessories. Founded in 1983, and now run by Shelley Broader, the company now has 12,350 employees and has a market cap of USD $1.10B, putting it in the small-cap stocks category.
CHS’s shares are currently floating at around -46% less than its actual worth of $15.65, at the market price of US$8.48, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. In terms of relative valuation, CHS’s PE ratio is trading at around 11.28x relative to its Specialty Retail peer level of, 20.12x meaning that relative to its comparable company group, we can invest in CHS at a lower price. CHS is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run.
Dig deeper into Chico’s FAS here.
Tailored Brands, Inc. (NYSE:TLRD)
Tailored Brands, Inc. operates as a specialty apparel retailer the United States, Puerto Rico, and Canada. Established in 1973, and currently headed by CEO Douglas Ewert, the company size now stands at 18,200 people and with the company’s market capitalisation at USD $1.32B, we can put it in the small-cap group.
TLRD’s shares are currently hovering at around -72% less than its intrinsic value of $93.19, at a price tag of US$26.49, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Moreover, TLRD’s PE ratio stands at 12x against its its Specialty Retail peer level of, 20.12x implying that relative to its comparable set of companies, TLRD’s shares can be purchased for a lower price. TLRD is also in good financial health, as current assets can cover liabilities in the near term and over the long run. More on Tailored Brands 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.
