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When Should You Buy Health Management International Ltd (SGX:588)?

Health Management International Ltd (SGX:588), which is in the healthcare business, and is based in Singapore, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of SGD0.54 to SGD0.58. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Health Management International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Health Management International

Is Health Management International still cheap?

Good news, investors! Health Management International is still a bargain right now. According to my valuation, the intrinsic value for the stock is SGD0.71, but it is currently trading at S$0.55 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Health Management International’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Health Management International generate?

SGX:588 Past and Future Earnings, March 5th 2019
SGX:588 Past and Future Earnings, March 5th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Health Management International’s earnings over the next few years are expected to increase by 29%, 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 588 is currently undervalued, it may be a great time to accumulate more of 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 588 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 588. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, 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 Health Management International. You can find everything you need to know about Health Management International in the latest infographic research report. If you are no longer interested in Health Management International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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 editorial-team@simplywallst.com. 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.

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