In This Article:
While Morgan Advanced Materials plc (LON:MGAM) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. 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. However, what if the stock is still a bargain? Let’s take a look at Morgan Advanced Materials’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Morgan Advanced Materials
Is Morgan Advanced Materials still cheap?
According to my valuation model, Morgan Advanced Materials seems to be fairly priced at around 4.9% below my intrinsic value, which means if you buy Morgan Advanced Materials today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth £3.38, 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 Morgan Advanced Materials’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 Morgan Advanced Materials 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. Though in the case of Morgan Advanced Materials, it is expected to deliver a relatively unexciting top-line growth of 7.6% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? MGAM’s 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 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 tabs on MGAM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.