In This Article:
APA Group (ASX:APA), a gas utilities company based in Australia, saw significant share price volatility over the past couple of months on the ASX, rising to the highs of A$8.48 and falling to the lows of A$7.68. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether APA Group’s current trading price of A$8.04 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at APA Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for APA Group
What is APA Group worth?
According to my valuation model, APA Group seems to be fairly priced at around 3% above my intrinsic value, which means if you buy APA Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$7.8, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like APA Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will APA Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 99.20% over the next couple of years, the future seems bright for APA Group. It looks like higher cash flows 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 APA’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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on APA, now may not be the most advantageous 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.