ComfortDelGro Corporation Limited (SGX:C52), a transportation company based in Singapore, received a lot of attention from a substantial price movement on the SGX in the over the last few months, increasing to SGD2.1 at one point, and dropping to the lows of SGD1.9. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether ComfortDelGro’s current trading price of SGD1.93 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ComfortDelGro’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for ComfortDelGro
Is ComfortDelGro still cheap?
Good news, investors! ComfortDelGro is still a bargain right now. According to my valuation, the intrinsic value for the stock is SGD2.66, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, ComfortDelGro’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of ComfortDelGro look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -4.19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for ComfortDelGro. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although ComfortDelGro is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to ComfortDelGro, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on ComfortDelGro for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.