While Karex Berhad (KLSE:KAREX) might not have the largest market cap around , it saw a decent share price growth of 11% on the KLSE over the last few months. The recent share price gains has brought the company back closer to its yearly peak. 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 examine Karex Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Karex Berhad
What Is Karex Berhad Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 14.09% above our intrinsic value, which means if you buy Karex Berhad today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is MYR0.73, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Karex Berhad’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Karex Berhad?
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. With profit expected to more than double over the next couple of years, the future seems bright for Karex Berhad. 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? KAREX’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 financial strength of the company. 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 tabs on KAREX, now may not be the most optimal 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.