Is Now The Time To Look At Buying Domain Holdings Australia Limited (ASX:DHG)?
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Domain Holdings Australia Limited (ASX:DHG), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the ASX over the last few months. The company is inching closer to its yearly highs following the recent share price climb. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Domain Holdings Australia’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Domain Holdings Australia Still Cheap?
According to our valuation model, the stock is currently overvalued by about 35%, trading at AU$4.25 compared to our intrinsic value of A$3.14. This means that the opportunity to buy Domain Holdings Australia at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Domain Holdings Australia’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Check out our latest analysis for Domain Holdings Australia
Can we expect growth from Domain Holdings Australia?
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 grow by 54% over the next couple of years, the future seems bright for Domain Holdings Australia. 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? DHG’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe DHG 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.