4 undervalued stocks you can buy

October 6, 2017 Finance Talk Valli Sarvani No comments

Stocks have the tendency to either be overvalued or undervalued. Overvalued stocks are trading at a higher price than their actual value. Conversely, undervalued stocks are trading at a lower price than their actual value. Therefore, this makes undervalued stocks the most valuable stocks of all.

Investors can buy into these stocks without too much cost and get great benefits in the long run. Undervalued stocks are often already at their bottom, so they are guaranteed to be beneficial stocks. These are four banking stocks that are currently undervalued, and will be able to provide great returns in the future.

For the past fourteen years, the Karur Vysya Bank has been paying 100% and above dividend. For the quarter ending on June 30th, 2017, the net profit of the bank rose to ₹148 crores. Their operating profit was up by an entire 30%, having risen to ₹ 449 crores.

The Karur Vysya Bank has a well-spread loan book, so there are not many risks for the bank going forward. They reported an EPS of ₹ 2.43 for the quarter ending on June 30th, 2017, and the stock is at a p/e of only 12 times.

The Karnataka Bank recently saw its profits rise by about 10% to ₹ 134 crores. They reported an EPS of ₹ 4.74 for the quarter ending on June 30th, 2017, and their stock is trading at a p/e of only 7 times.

There is significant potential for growth, since the shares are trading below book value. Additionally, the bank believes that the asset quality pressure is moderating, and that the capital adequacy will leave room for further growth.

The South Indian Bank currently has levels of ₹ 28, and their stock has a face value of ₹ 1. For the quarter ending on June 30th, 2017, the bank reported an EPS of ₹ 0.56. If this EPS is maintained, the South Indian Bank can report an EPS of ₹ 2.4 for 2017-2018.

The bank also has a solid branch presence throughout South India. Therefore, this stock is quite undervalued, with only 11.66 times earnings for one-year forward.

The Bank of Baroda is the third-largest government-owned bank in India, and therefore, it would be one of the first banks to benefit if there is an improvement in the asset quality of banks.

The stock is currently at a 52-week low, trading at only ₹ 136 on the NSE (National Stock Exchange). However, this stock is highly recommended, since the government may capitalize on banks in the future.

There may also be an improvement in the asset quality of the Bank of Baroda itself. Thus, this is an excellent stock to invest in for the long term.

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