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Ocado Group plc (LON:OCDO), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£4.05 and falling to the lows of UK£2.96. 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 Ocado Group's current trading price of UK£3.04 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ocado Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Ocado Group
What's The Opportunity In Ocado Group?
The stock is currently trading at UK£3.04 on the share market, which means it is overvalued by 33% compared to our intrinsic value of £2.28. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Ocado Group’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.
What does the future of Ocado Group look like?
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 profit expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for Ocado Group. 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 well and truly priced in OCDO’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe OCDO 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.
Are you a potential investor? If you’ve been keeping an eye on OCDO for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for OCDO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.