Econpile Holdings Berhad (KLSE:ECONBHD), might not be a large cap stock, but it saw a decent share price growth of 19% on the KLSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Econpile Holdings Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Econpile Holdings Berhad
Great news for investors – Econpile Holdings Berhad is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is MYR0.63, but it is currently trading at RM0.47 on the share market, meaning that there is still an opportunity to buy now. However, given that Econpile Holdings Berhad’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Econpile Holdings Berhad’s case, its revenues over the next few years are expected to grow by 66%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
Are you a shareholder? Since ECONBHD is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on ECONBHD for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ECONBHD. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
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