Undervalued stocks are the ones that have their market value lower than the intrinsic value. This can be due to many reasons that can be sector-specific, socio-economic conditions or market slowdown.
From an investor’s point of view, undervalued stocks have the potential to yield substantial returns if all the variables are analyzed properly. Investors usually wait for the market conditions that will slow down the market and render the market price of a stock below its intrinsic value.
So here are some of the Undervalued stocks in the Malaysian market for 2021. These Malaysia stock picks will help you to make good returns in this financial year.
#1. App Asia
App Asia is a service provider for electronic bank confirmation programs. It is working in collaboration with the Malaysian Institute of Accountants. The company is expecting a significant increase in contributions from the financial year 2021. All these agreements will last for 12 years till 2030. The company has a new collaboration with Telekom Malaysia Bhd subsidiary to transform the yellow page business directory into a digital business community.
The share is highly undervalued and it is expected that the prices will surge due to the expansion plans and new ventures of the company.
#2. D’nonce Technology
The company has seen record-high earnings in the financial year 2021 as the packages boxes manufactured by the company are used by major glove manufacturers. The company is also expanding its business in the electrical and electronics sector. It provides various services to multinational companies such as cleanroom service, box-build assembly.
#3. RCE Capital
The company provides financing to over 80000 civil servants via a salary deduction scheme. The company benefits from a low-interest-rate environment that lowers its cost of funding and the company generates good returns out of this. It has shown consistent improvement in the asset quality over years and the nonperforming loans ratio of the company is at 4% which is pretty good. There are strong growth prospects attached to the company that makes shares of the company a good investment opportunity.
The company is involved in the manufacturing of medical cables that will see robust earnings growth due to increased demand owing to the COVID-19 pandemic. The company has doubled its production capacity for cables that are approved by the Food and Drug Administration (FDA) and European Medical Agency (EMA). The company is expected to deliver the strongest ever performance with growth in earning per share of 59% for the financial year 2020 and 68% for the financial year 2021.
The balance sheet of the company is quite healthy as well. The shares of the company are undervalued due to the pandemic but they are expected to rise owing to the good future prospects of the company.
Investing in undervalued stocks requires good consideration of the market conditions. We recommend you to take note of KLSE stock tips before making any investment in the shares. If you have done exhaustive research about the market then these stocks can be a good investment opportunity.