Investing in undervalued stocks, or those trading below their intrinsic value, is a popular strategy on Wall Street. You need to identify companies that are flying under the radar and trading at attractive multiples, allowing you to derive outsized gains over time.
Wall Street stalwarts, including Warren Buffett and Benjamin Graham, have made this investment strategy popular, enabling them to build generational wealth in the long run. Here, I have identified three undervalued stocks trading at less than $30.
Green Thumb Industries
One of the largest pot producers globally, Green Thumb Industries (CNSX: GTII) is a multi-state operator valued at a market cap of $2.6 billion. A multi-state operator that enjoys consistent profits, Green Thumb stock is down over 60% from all-time highs. It has reported a positive net income for 10 consecutive quarters and is on track to surpass $1.5 billion in annual sales this year.
In the last three quarters, Green Thumb reported a net income of US$63 million, an increase of 20% compared to the year-ago period. Comparatively, its sales rose by 20% to US$758 million, indicating a net margin of 8.3%.
The cannabis giant is well poised to benefit if marijuana is legalized at the federal level in the U.S. due to its huge presence in several states south of the border.
Priced at less than two times forward sales and 19.5 times forward earnings, Green Thumb is attractively valued. Analysts tracking GTII stock remain bullish and expect it to gain close to 200% in the next 12 months.
Well Health Technologies
A high-growth company part of the rapidly expanding health-tech space, Well Health (TSX: WELL) should be part of your shopping list in 2023. Its omnichannel business model allows Well Health to generate predictable revenue. Moreover, Well Health should also benefit from the network effects driven by the acquisition of multiple healthcare assets in recent years.
The company’s patient services are delivered at scale and in partnership with its network of integrated care facilities. In fact, Well Health operates the largest outpatient medical clinic network in Canada.
Its virtual business includes services such as telehealth, revenue cycle management, digital booking, and workflow automation, among others.
Valued at a market cap of $892 million, WELL stock is priced at 1.4 times 2023 sales. Analysts expect the stock to almost double in the next year.
Dye & Durham
The final undervalued stock on my list is Dye & Durham (TSX: DND), an enterprise-facing company valued at $1.26 billion.
Armed with a customer base of over 60,000, Dye & Durham reported revenue of $120.2 million and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $64.4 million in the fiscal first quarter of 2023 (ended in September). Global real estate transactions accounted for 68% of revenue, providing investors with regional diversification.
In terms of its balance sheet, DND has net debt of $676 million, while its EBITDA in the last 12 months stood at $269 million, indicating a debt-to-EBITDA multiple of 2.5 times.
Analysts expect sales to surge over $500 million in fiscal 2024. So, DND stock is priced at less than three times forward sales, which is quite attractive for value investors.
