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Renold plc (LON:RNO), might not be a large cap stock, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£0.56 and falling to the lows of UK£0.46. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Renold's current trading price of UK£0.48 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Renold’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Renold
What's The Opportunity In Renold?
Great news for investors – Renold is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is £0.69, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Renold’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Renold?
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. Renold's earnings over the next few years are expected to increase by 52%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since RNO 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 financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on RNO 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 RNO. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.