At $42.02, Is ATCO Ltd (TSE:ACO.X) A Buy?

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ATCO Ltd (TSX:ACO.X), a integrated utilities company based in Canada, maintained its current share price over the past couple of month on the TSX, with a relatively tight range of CA$42 to CA$45.6. However, does this price actually reflect the true value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ATCO’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for ATCO

What is ATCO worth?

The stock is currently trading at CA$42.02 on the share market, which means it is overvalued by 23% compared to my intrinsic value of CA$34.24. Not the best news for investors looking to buy! Furthermore, ATCO’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will ATCO generate?

TSX:ACO.X Future Profit Mar 12th 18
TSX:ACO.X Future Profit Mar 12th 18

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 76.65% over the next couple of years, the future seems bright for ATCO. 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? ACO.X’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ACO.X should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ACO.X for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for ACO.X, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ATCO. You can find everything you need to know about ATCO in the latest infographic research report. If you are no longer interested in ATCO, you can use our free platform to see my list of over 50 other stocks with a high growth potential.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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