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Canfor Pulp Products Inc. (TSE:CFX), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. While good news for shareholders, the company has traded much higher in the past year. As a small cap stock, which tends to lack high analyst coverage, 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? Today we will analyse the most recent data on Canfor Pulp Products’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Canfor Pulp Products
What Is Canfor Pulp Products Worth?
Good news, investors! Canfor Pulp Products is still a bargain right now. According to our valuation, the intrinsic value for the stock is CA$1.50, but it is currently trading at CA$0.91 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Canfor Pulp Products’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Canfor Pulp Products generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Canfor Pulp Products, it is expected to deliver a negative revenue growth of -15% over the next couple of 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? Although CFX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CFX, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CFX for some time, but hesitant on making the leap, we recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.