Cherokee Inc (NASDAQ:CHKE), a luxury company based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $1.55 at one point, and dropping to the lows of $0.61. 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 Cherokee’s current trading price of $0.65 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 Cherokee’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 Cherokee
Is Cherokee still cheap?
Great news for investors – Cherokee is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $4.34, but it is currently trading at US$0.65 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Cherokee’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of Cherokee 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. With profit expected to grow by 96.94% over the next year, the near-term future seems bright for Cherokee. 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 CHKE 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 CHKE 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 CHKE. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cherokee. You can find everything you need to know about Cherokee in the latest infographic research report. If you are no longer interested in Cherokee, 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.