Should You Buy Healthcare Services Group Inc (NASDAQ:HCSG) At $39.49?
Healthcare Services Group Inc (NASDAQ:HCSG), a commercial services company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $56.01 and falling to the lows of $38.5. 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 Healthcare Services Group’s current trading price of $39.49 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 Healthcare Services Group’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 Healthcare Services Group
What’s the opportunity in Healthcare Services Group?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10% above my intrinsic value, which means if you buy Healthcare Services Group today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $35.84, there’s only an insignificant downside when the price falls to its real value. Furthermore, Healthcare Services Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
Can we expect growth from Healthcare Services Group?
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. With profit expected to more than double over the next couple of years, the future seems bright for Healthcare Services Group. 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? It seems like the market has already priced in HCSG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on HCSG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Healthcare Services Group. You can find everything you need to know about Healthcare Services Group in the latest infographic research report. If you are no longer interested in Healthcare Services Group, 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.
