Hey this is tom and in case you're new here i used to be a financial analyst. Now i'm a full-time youtuber and i'm here to talk to you about the stock market and specifically in today's video, i'm going to show a company that i believe is about 86 undervalued. Even with the most strict conservative assumptions, i could think of now. As always, the bottom line in my videos comes first, so i'm going to tell you which company how much is overvalued everything and then, if you want to stay for the full analysis, you're more than welcome.

But i do respect your time. So i'm going to give you the bottom line. First now before we get started, don't click, nothing, don't smash! Nothing! There's no need just watch this and listen now. The company i'm talking about is vale.

The brazilian company vale is actually a miner that engages in mining expensive from the ground, but the most important thing is that i believe in the current structure. Their share is about 86 undervalued, so we can see a lot of upside as long as there's no major catastrophes that are going to impact their business. Obviously this is a very risky business. We're talking about mining, so a lot of work, shortages or regulation or natural disasters, or even spikes or basically spikes downwards in the price of the stuff.

They dig up from the ground. So there is risk involved, but assuming you can manage the risk and you can mitigate, i believe, there's a huge amount of upside in this company and i'll show you my dcf as well as their financials, as well as their numbers. Everything, i think you need to see to start researching this to make a decision, because i'm not a financial advisor. This is not financial advice.

I'm just sharing with you my opinion and i think the next step for you is after you watch this video is actually you do your own research and make your own decision. If this is a good investment for you or not. Thank you. My name is tom nash and i quit my corporate job as a senior financial analyst to break down companies for you there's one thing you need to know about me: i don't take from anybody so right now on the screen, you're seeing vale and it's safe to Say that the last six months were not a good time for valley we're talking about 36 percent loss of share price in six months, it's kind of insane 62 billion market cap and, as you can see here, an insane dividend yield almost a 17.6 dividend yield.

One of the highest you can find in the market, which i think is really impressive if you're into dividend stock as well. So let's look at profitability. This is a company that generates 63 ebitda and 31 and a half 31.6 net income margin. These margins, for somebody who's not in sas, are pretty much to drool on, and this is monopoly money.

The margins are phenomenal. 31.5 cents on the dollar is really impressive. The other impressive thing you're going to look here is the growth. This is a company that grew by 77 percent year over year.

They are expected to slow down, but still we're looking at another seven and a half percent growth next year and so forth and so forth. You have to understand that digging up from the ground in inflationary times tends to be quite lucrative because people need more. I mean it's kind of basic. You don't need to do a lot of math as far as the valuation goes for this company again very cheap look price to earnings current twelve months is eighty percent undervalued at three point: seven ev sales.

This is ridiculous. At one point: twenty three uh thirty one point: six percent, undervalued, ev ebitda is one point. Ninety five, eighty percent, undervalued and price to sales is 1.17 25 undervalued. So by almost any metric, this company is insanely undervalued, but wait i'm still going to show you the dcf.

I do want to show you this, i'm not really hard into dividend stocks, but i mean their payout ratio and the yield is just insane um. Almost 18 dividend yield quite insane very good as far as the financials go they're really fluctuating with the price of the stuff they're digging up from the ground, as you would expect. So you can see a lot of fluctuation in the revenues, but at this point they're at an all-time high, i think - or at least for the past 10 years the closest they came was 2011., so 55.5 billion dollars. If you look at the balance sheet again, you'll find really a company.

That's run in a very strict manner. You can see here total cash and cash equivalents of 12. and if you take a look at the balance sheet, you're going to find 12 and a half billion dollars in total cash and investments. As far as the debt goes, the total debt, i believe, is 18.6.

So they're slightly debt negative, which means they have more debt in cash by about six billion. However, if you take a look at their assets to ratio, you can see that the total assets are 86.7 billion right here and if you scroll down to the total liabilities, you'll find the dollar bill is a 52.7. So they have about 30 billion of gaap of assets over liabilities, so whatever they have in cash can be supplemented by these 30 billion, so they have no problem repaying their debts. That's kind of the given and here's the dcf for this company 22.5 billion in 2021 and a 5 annual growth every year for 5 years, so well below the expectations.

Also effective tax rate of 18, which is what they're paying and 50 billion dollars in capex, which is way above what they're spending right now and i used a discount of 12, which is, as you know, two percent higher than the discount rate. I usually use for the risk the extra risk that this company poses and just to give myself an extra question: 7.6 multiplier very low because of the industry, mining and the 4 perpetual growth. And, as you can see right here, we use extremely conservative assumptions, really high discount rates very low growth and we got to 23.8 dollars, which is 87 higher than its current share price, even under this strict circumstances. So i see a lot of potential in this company.

Although, as i mentioned earlier, you still got to do in research because i'm not a financial advisor, that's just my opinion. So go ahead. Do your research - and this is from the main page of tip ranks by the way, there's a link for you to join the pranks with a 10 discount, i'm affiliated with them, but i've been a paying customer for ages. Even before i had an affiliate link, i love their stuff, so vale currently is looking at 17.2, which is actually my dcf valuation for the analysts and current price is 12.88.

So we have a huge gap here and if you look at the analysts that are covering this stock, only the five star analysts, you have really only five good analysts and outside of one. All of them have massive upsides for the stock and one is actually higher than mine, but the other one is exactly with me and one more that's at 16 and 40 percent, but i mean in general you can see a lot of positive notions over this company. Coming out from the analysts, and as always, i just want to say huge thanks to the channel members and the patients. If you appreciate this video - and you want to watch more - i'm going to put another video right here, so you guys can check out and also thank you for the members.

Thank you for the patreons. Your support five dollars per month makes me able to do these videos which are not really clickable but provide. I think, a lot of value if you want to join five dollars per month. The links are below i'll, see you tomorrow.