In This Article:
While Mainstreet Equity Corp. (TSE:MEQ) might not have the largest market cap around , it saw significant share price movement during recent months on the TSX, rising to highs of CA$213 and falling to the lows of CA$191. 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 Mainstreet Equity's current trading price of CA$204 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 Mainstreet Equity’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 Mainstreet Equity
Is Mainstreet Equity Still Cheap?
According to our valuation model, Mainstreet Equity seems to be fairly priced at around 18.09% above our intrinsic value, which means if you buy Mainstreet Equity today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth CA$172.61, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Mainstreet Equity’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Mainstreet Equity 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. Though in the case of Mainstreet Equity, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? MEQ seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.