coin can be undervalued if the tech is good and the marketcap is low for its potential use..
its really your own decision most of the times and need to make a research for that and find use cases of the coin in the future
I think it is really checking the activities of a coin that would really help you decide whether it is undervalued or not. The price whether cheap it is now, if it is active, then that will spell many things for a coin. To see if it really can be something in a few years or not.
I concur with both Karto and HEvangelista. Sound tech with a solid use case and an active dev team and community, combined with a low market cap, are major metrics for determining whether a coin is undervalued.
Case in point:
Spectrecoin (XSPEC). Privacy coins are the wave of the future (soild use case), and Spectrecoin has some of the most robust privacy and anonymity technology available (sound tech).
There are only around 21 million in circulation, yet the market cap is less than USD 7 million.
There is no question that this coin has an active and dedicated dev team and community. The community is particularly notable for its dedication and action at the grassroots level (i.e. word of mouth marketing, tutorials, website upgrades coming soon).
You can find out more about this hidden gem here:
http://coinwiki.info/en/SpectreCoin