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Belvoir Group PLC (LON:BLV), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the AIM. As a small cap stock, hardly covered by any analysts, 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 I will analyse the most recent data on Belvoir Group’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Belvoir Group
Is Belvoir Group still cheap?
Great news for investors – Belvoir Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £3.71, but it is currently trading at UK£2.48 on the share market, meaning that there is still an opportunity to buy now. However, given that Belvoir Group’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 kind of growth will Belvoir Group generate?
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. However, with a negative profit growth of -2.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Belvoir Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although BLV is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to BLV, 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 tabs on BLV for some time, but hesitant on making the leap, I recommend you dig deeper 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.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've found that Belvoir Group has 3 warning signs (1 shouldn't be ignored!) that deserve your attention before going any further with your analysis.