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Data I/O Corporation (NASDAQ:DAIO), a electronic company based in United States, received a lot of attention from a substantial price movement on the NasdaqCM over the last few months, increasing to $11.52 at one point, and dropping to the lows of $6.97. 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 Data I/O’s current trading price of $7.13 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Data I/O’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 Data I/O
Is Data I/O still cheap?
Great news for investors – Data I/O is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $12.53, but it is currently trading at US$7.13 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Data I/O’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Data I/O look like?
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. However, with a negative profit growth of -13.76% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Data I/O. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although DAIO is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to DAIO, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on DAIO for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Data I/O. You can find everything you need to know about Data I/O in the latest infographic research report. If you are no longer interested in Data I/O, 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.