In This Article:
Frontier Digital Ventures Limited (ASX:FDV), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Frontier Digital Ventures’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Frontier Digital Ventures
Is Frontier Digital Ventures Still Cheap?
According to our valuation model, Frontier Digital Ventures seems to be fairly priced at around 7.9% below our intrinsic value, which means if you buy Frontier Digital Ventures today, you’d be paying a reasonable price for it. And if you believe the company’s true value is A$0.50, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Frontier Digital Ventures’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Frontier Digital Ventures 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 72% over the next year, the near-term future seems bright for Frontier Digital Ventures. 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 already priced in FDV’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. 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 FDV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.