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Ramsay Health Care Limited (ASX:RHC) saw its share price hover around a small range of A$65.27 to A$70.6 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ramsay Health Care’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Ramsay Health Care
What’s the opportunity in Ramsay Health Care?
The stock is currently trading at AU$66.63 on the share market, which means it is overvalued by 23% compared to my intrinsic value of A$54.26. This means that the opportunity to buy Ramsay Health Care at a good price has disappeared! In addition to this, it seems like Ramsay Health Care’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Ramsay Health Care?
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 profit expected to grow by 44.22% over the next couple of years, the future seems bright for Ramsay Health Care. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in RHC’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RHC should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on RHC for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for RHC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.