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Morgan Advanced Materials plc (LON:MGAM), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Morgan Advanced Materials’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Morgan Advanced Materials
What's the opportunity in Morgan Advanced Materials?
Good news, investors! Morgan Advanced Materials is still a bargain right now. According to my valuation, the intrinsic value for the stock is £4.87, but it is currently trading at UK£2.94 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Morgan Advanced Materials’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 Morgan Advanced Materials?
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. Morgan Advanced Materials' earnings over the next few years are expected to increase by 37%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since MGAM is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive 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 MGAM for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MGAM. 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.