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RADCOM Ltd. (NASDAQ:RDCM), is not the largest company out there, but it saw a significant share price rise of 26% in the past couple of months on the NASDAQCM. The company is inching closer to its yearly highs following the recent share price climb. 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? Let’s take a look at RADCOM’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for RADCOM
What's The Opportunity In RADCOM?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 14% below our intrinsic value, which means if you buy RADCOM today, you’d be paying a fair price for it. And if you believe that the stock is really worth $13.80, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, RADCOM has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will RADCOM generate?
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. RADCOM's revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? RDCM’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on RDCM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.