The EGX30 is down about 14% since the start of 2022, which made me think there must be some opportunities for undervalued stocks after this year’s sell-off.
Here’s why I believe Telecom Egypt (ETEL), GB Auto (AUTO), Abu Dhabi Islamic Bank Egypt (ADIB), Emaar Misr (EMFD), & Credit Agricole Egypt (CIEB) are five of the most undervalued stocks on the EGX right now.
I set criteria of four fundamental ratios in going about this exercise, 1) a P/E Ratio less than 5, 2) a Price to Book Value/Per Share less than 1, 3) a Return on Average Equity (ROAE) of more than 20%, & 4) a 6-month Average Daily Traded Value more than EGP 5 million.
What these criteria show is:
– P/E Ratio: gives an idea of how much an investor needs to invest for every EGP 1 in earnings. A low P/E might indicate that the current stock price is low relative to earnings.
– Price to Book Value/Share: A P/B of less than 1 suggests that the market is valuing the company at less than the total value of its assets. This means that its shares may currently be undervalued or cheap and therefore present a good buy opportunity.
– ROAE: measures the return on every EGP 1 of equity invested during a year.
– 6-month ADTV: measures a stock’s liquidity, the higher the traded value of a stock, the more trading activity there is on it & less volatility.
Here are the data for each of the five stocks:
| Stock Ticker | P/E Ratio | Price-to-BV Per Share | ROAE | 6-Month ADTV (M) |
| ETEL | 3.73 | 0.62 | 20% | 12.96 |
| AUTO | 2.81 | 0.61 | 28% | 11.49 |
| ADIB | 1.59 | 0.35 | 23% | 10.33 |
| EMFD | 2.92 | 0.53 | 20% | 7.30 |
| CIEB | 4.73 | 0.88 | 20% | 8.24 |
These data are as of May 26, 2022
*I/we own no stock, option or similar derivative position in any of the companies mentioned, & have no plans to initiate any such positions within the next 72 hours.
* This is not investment advice & you should do your own research before making investment decisions.
