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Calian Group Ltd. (TSE:CGY), is not the largest company out there, but it saw significant share price movement during recent months on the TSX, rising to highs of CA$66.90 and falling to the lows of CA$54.55. 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 Calian Group's current trading price of CA$57.38 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Calian Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Calian Group
What's the opportunity in Calian Group?
According to my valuation model, Calian Group seems to be fairly priced at around 10% below my intrinsic value, which means if you buy Calian Group today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$64.03, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Calian Group has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Calian Group generate?
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 42% over the next couple of years, the future seems bright for Calian 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? CGY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on CGY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.