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Mesa Laboratories, Inc. (NASDAQ:MLAB), might not be a large cap stock, but it saw a significant share price rise of 30% in the past couple of months on the NASDAQGS. While good news for shareholders, the company has traded much higher in the past year. 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? Let’s take a look at Mesa Laboratories’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Mesa Laboratories
Is Mesa Laboratories Still Cheap?
Good news, investors! Mesa Laboratories is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is $158.35, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Mesa Laboratories’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Mesa Laboratories look like?
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. With revenues expected to grow by a double-digit 25% over the next couple of years, the outlook is positive for Mesa Laboratories. If the level of expenses is able to be maintained, 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 MLAB 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 MLAB for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MLAB. 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.