Three undervalued stocks to buy now

Professional investor Tristan Chapple picks three undervalued stocks with strong prospects to buy now.

Each week, a professional investor tells us where he'd put his money.This week: Tristan Chapple of the Aurora Investment Trust.

We agree with Warren Buffett: "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price". Among the criteria we think make a business "wonderful" are a high return on capital (15% or above), pricing power, and enough predictability for us to assume the company will be in business for many years to come. We also need to understand why the business can earn such high returns and then monitor its progress closely over time. Ultimately, delivering excellent long-term investment returns requires patience. Here are three examples of companies that we currently believe have strong prospects but are undervalued.

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Tristan Chapple is director of the Aurora Investment Trust plc