While MAS P.L.C. (JSE:MSP) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the JSE over the last few months. 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 take a look at MAS’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for MAS
Is MAS Still Cheap?
According to my valuation model, MAS seems to be fairly priced at around 11% below my intrinsic value, which means if you buy MAS today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ZAR19.34, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, MAS has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from MAS?
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 10% over the next couple of years, the outlook is positive for MAS. 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? It seems like the market has already priced in MSP’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 an eye on MSP, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.
If you want to dive deeper into MAS, you'd also look into what risks it is currently facing. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of MAS.