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Growthpoint Properties Australia (ASX:GOZ), a reits company based in Australia, saw a double-digit share price rise of over 10% in the past couple of months on the ASX. 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. But what if there is still an opportunity to buy? Let’s take a look at Growthpoint Properties Australia’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for Growthpoint Properties Australia
What’s the opportunity in Growthpoint Properties Australia?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.54% below my intrinsic value, which means if you buy Growthpoint Properties Australia today, you’d be paying a fair price for it. And if you believe the company’s true value is A$4.14, then there’s not much of an upside to gain from mispricing. Furthermore, Growthpoint Properties Australia’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Growthpoint Properties 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Growthpoint Properties Australia, at least in the near future.
What this means for you:
Are you a shareholder? GOZ seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on GOZ for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on GOZ should the price fluctuate below its true value.