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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Cardinal Energy Ltd. (TSE:CJ) due to its excellent fundamentals in more than one area. CJ is a company that has been able to sustain great financial health, trading at an attractive share price. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Cardinal Energy here.
Undervalued with adequate balance sheet
CJ is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that CJ has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. CJ seems to have put its debt to good use, generating operating cash levels of 0.34x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. CJ is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Also, relative to the rest of its peers with similar levels of earnings, CJ's share price is trading below the group's average. This further reaffirms that CJ is potentially undervalued.
For Cardinal Energy, I've put together three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CJ’s future growth? Take a look at our free research report of analyst consensus for CJ’s outlook.
- Historical Performance: What has CJ's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CJ? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.