In This Article:
Finders Resources Limited (ASX:FND), a metals and mining company based in Australia, led the ASX gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Finders Resources’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Finders Resources
What is Finders Resources worth?
Great news for investors – Finders Resources is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$1.43, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Finders Resources’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Finders Resources look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With revenues expected to grow by a double-digit 15.41% over the next couple of years, the outlook is positive for Finders Resources. If the level of expenses is able to be maintained, 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? Since FND is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on FND for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FND. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.