Should You Buy Cogeco Communications Inc (TSE:CCA) Now?
Cogeco Communications Inc (TSX:CCA), a media company based in Canada, saw significant share price volatility over the past couple of months on the TSX, rising to the highs of CA$87.72 and falling to the lows of CA$69.18. 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 Cogeco Communications’s current trading price of CA$70.11 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cogeco Communications’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 Cogeco Communications
What’s the opportunity in Cogeco Communications?
Great news for investors – Cogeco Communications is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CA$159.93, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Cogeco Communications’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of Cogeco Communications 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. Cogeco Communications’s earnings over the next few years are expected to increase by 22.10%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since CCA 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 CCA for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CCA. 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 buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cogeco Communications. You can find everything you need to know about Cogeco Communications in the latest infographic research report. If you are no longer interested in Cogeco Communications, 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.
