Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Capital Markets industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Capital Markets Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Capital Markets Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Capital Markets industry for Tuesday, November 05, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Capital Markets industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

GCM Grosvenor Inc.’s Value Grade

Value Grade:

GCM Grosvenor Inc. is global alternative asset management solutions provider. The firm primarily provides its services to pooled investment vehicles. It also provides its services to investment companies, high net worth individuals, pension and profit sharing plans and state or municipal government entities. The firm invests in equity and alternative investment markets of the United States and internationally. The firm invests in multi-strategy, credit-focused, equity-focused, macro-focused, commodity-focused, and other specialty portfolios. It focuses in hedge fund asset classes, private equity, real estate, and/or infrastructure, credit and absolute return strategies. It also focuses in primary fund investments, secondary fund investments, and co-investments with a focus on buyout, distressed debt, mezzanine, venture capital/growth equity investments. The firm seeks to do seed investments in small, emerging, and diverse private equity firms. The firm seeks to make regionally-focused investments in middle-market buyout. It prefers to invest in aerospace and defense, advanced electronics, information technology, biosciences, and advanced materials. It focuses on Ohio and the Midwest region. The firm employs fundamental and quantitative analysis. GCM Grosvenor Inc. was founded in 1971 and is based in Chicago, Illinois with additional offices in North America, Asia, Australia and Europe.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

GCM Grosvenor Inc. has a Value Score of 65, which is considered to be undervalued.

When you look at GCM Grosvenor Inc.’s price-to-sales ratio at 1.10 compared to the industry median at 2.85, this company has a lower price relative to revenue compared to its peers. This could make GCM Grosvenor Inc.’s stock more attractive for value investors.

Now, let’s assess GCM Grosvenor Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 17.0, when compared to the industry median of 15.0, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. GCM Grosvenor Inc.’s shareholder yield is the same than its industry median ratio of 1.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

Lastly, let’s take a look at GCM Grosvenor Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. GCM Grosvenor Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.30. This could make GCM Grosvenor Inc. more attractive because the lower P/FCF ratio indicates that GCM Grosvenor Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Magic Empire Global Limited’s Value Grade

Value Grade:

Magic Empire Global Limited engages in the provision of corporate finance advisory services and underwriting services in Hong Kong. The company provides initial public offering sponsorship, financial and independent financial advisory, post-listing compliance advisory, and underwriting services by acting as global coordinator, bookrunner, lead manager, or underwriter. It also offers corporate services, which include accounting and financial reporting advisory, company secretarial services, internal control enhancement, investor relations advisory, and other consulting services. The company was incorporated in 2016 and is headquartered in Central, Hong Kong.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Magic Empire Global Limited has a Value Score of 89, which is considered to be undervalued.

Magic Empire Global Limited’s price-to-book ratio is higher than its peers. This could make Magic Empire Global Limited less attractive for value investors when compared to the industry median at 1.98.

You can read more about Magic Empire Global Limited’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

MarketWise, Inc.’s Value Grade

Value Grade:

MarketWise, Inc. operates a content and technology multi-brand platform for self-directed investors in the United States and Internationally. Its platform includes subscription businesses that provides financial research, software, education, and tools to navigate the financial markets. The company offers various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, crowdfunded investing, biotechnology, mutual funds, options, and trading; investment research product portfolio through a range of media, including desktops, laptops, tablets, and mobile; and financial newsletters. It provides a suite of stock research tools and portfolio management services under the Chaikin Analytics brand; portfolio management software tools under the TradeSmith brand name; and database of accounting-based financial summaries under the Altimetry brand. In addition, the company develops screeners, monitors, portfolio management tools, and proprietary indicators that produce a composite score to rank publicly traded companies. The company was founded in 1999 and is headquartered in Baltimore, Maryland.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

MarketWise, Inc. has a Value Score of 64, which is considered to be undervalued.

MarketWise, Inc.’s price-earnings ratio is 6.9 compared to the industry median at 23.1. This means that it has a lower price relative to its earnings compared to its peers. This makes MarketWise, Inc. more attractive for value investors.

You can read more about MarketWise, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Runway Growth Finance Corp.’s Value Grade

Value Grade:

Runway Growth Finance Corp. is a business development company specializing investments in senior-secured loans to late stage and growth companies. It prefers to make investments in companies engaged in the technology, life sciences, healthcare and information services, business services and select consumer services and products sectors. It prefers to investments in companies engaged in electronic equipment and instruments, systems software, hardware, storage and peripherals and specialized consumer services, application software, healthcare technology, internet software and services, data processing and outsourced services, internet retail, human resources and employment services, biotechnology, healthcare equipment and education services. It invests in senior secured loans between $10 million and $75 million.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Runway Growth Finance Corp. has a Value Score of 86, which is considered to be undervalued.

Runway Growth Finance Corp.’s price-earnings ratio is 13.2 compared to the industry median at 23.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Runway Growth Finance Corp. more attractive for value investors.

Runway Growth Finance Corp.’s price-to-book ratio is higher than its peers. This could make Runway Growth Finance Corp. less attractive for value investors when compared to the industry median at 1.98.

You can read more about Runway Growth Finance Corp.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Vinci Partners Investments Ltd.’s Value Grade

Value Grade:

Vinci Partners Investments Ltd. operates as an asset management firm in Brazil. The company focuses on private markets, liquid strategies, investment products and solutions, and retirement services. It offers private equity, infrastructure, real estate, credit, special situations, equities, hedge funds, and investment products and solutions comprising portfolio and management services. In addition, the company financial and strategic advisory services, focusing on IPO advisory and mergers and acquisition transactions to entrepreneurs, corporate senior management teams, and boards of directors. Vinci Partners Investments Ltd. was founded in 2009 and is based in Rio de Janeiro, Brazil.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Vinci Partners Investments Ltd. has a Value Score of 94, which is considered to be undervalued.

Vinci Partners Investments Ltd.’s price-earnings ratio is 19.2 compared to the industry median at 23.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Vinci Partners Investments Ltd. more attractive for value investors.

Vinci Partners Investments Ltd.’s price-to-book ratio is higher than its peers. This could make Vinci Partners Investments Ltd. less attractive for value investors when compared to the industry median at 1.98.

You can read more about Vinci Partners Investments Ltd.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Capital Markets Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Capital Markets stocks as well as other industrys.

Choosing Which of the 5 Best Capital Markets Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• GCM Grosvenor Inc. stock has a Value Grade of B.
• Magic Empire Global Limited stock has a Value Grade of A.
• MarketWise, Inc. stock has a Value Grade of B.
• Runway Growth Finance Corp. stock has a Value Grade of A.
• Vinci Partners Investments Ltd. stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 undervalued stocks in the Capital Markets industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Capital Markets Stocks

Want to learn more about Capital Markets stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Capital Markets Stocks for Tuesday, November 05
• 5 Undervalued Capital Markets Stocks for Monday, November 04
• 7 Undervalued Capital Markets Stocks for Friday, November 01
• 5 Undervalued Capital Markets Stocks for Thursday, October 31

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.