In This Article:
MotorCycle Holdings Limited (ASX:MTO), might not be a large cap stock, but it led the ASX gainers with a relatively large price hike in the past couple of weeks. 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? Today we will analyse the most recent data on MotorCycle Holdings’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for MotorCycle Holdings
What's The Opportunity In MotorCycle Holdings?
Great news for investors – MotorCycle Holdings is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is A$2.67, but it is currently trading at AU$1.62 on the share market, meaning that there is still an opportunity to buy now. However, given that MotorCycle Holdings’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.
What does the future of MotorCycle Holdings look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 32% over the next couple of years, the future seems bright for MotorCycle Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since MTO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on MTO for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MTO. 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.