A Cheap Stock Mispriced Because No One Looked Closer

6.5x earnings. 0.93x book value.

Key Metrics:

• 6.5x earnings

• 0.93x book value

• Half its market cap in cash

• No debt

• Discount due to missunderstanding

Michael Burry once said:

“Where there is misunderstanding, there is often value.”

What he meant was that when a business is misunderstood or overlooked, its stock can trade far below its intrinsic value.

Not because of actual problems, but because other investors simply don’t take the time to understand it.

That kind of opportunity doesn’t show up often.

At least not in large or even mid-cap stocks, since there are just too many eyes watching them and too many analysts constantly pricing in every piece of information.

But in the world of microcaps, it’s a different story.

Here, inefficiencies still exist. Sometimes, for example, it can be as simple as this:

A company shows a few years of elevated capex, and most investors instantly pass, assuming it's a red flag, without asking why.

Yet, if you take the time to dig deeper, you might find that the capex was actually strategic, and part of a multi-year growth and modernization plan that’s already paying off. With margins already improving and profitability on the rise.

And with that investment phase about to end, free cash flow is likely to rebound very soon, just as the stock is still being priced like nothing changed.

If you can spot such a gap in understanding, you may have found yourself a high-quality business, trading at a discount, simply because no one else bothered to look closer.

Now, what if I told you this wasn’t just a hypothetical example...

It’s exactly what’s happening with today’s stock.

So let’s take a closer look.