Should You Buy Stellar Biotechnologies Inc (SBOT) Now?
Stellar Biotechnologies Inc (NASDAQ:SBOT), a biotechnology company based in United States, received a lot of attention from a substantial price movement on the NasdaqCM in the over the last few months, increasing to $1.44 at one point, and dropping to the lows of $1.11. 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 SBOT's current trading price of $1.19 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 SBOT’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Stellar Biotechnologies
What's the opportunity in SBOT?
Great news for investors – SBOT is still trading at a fairly cheap price. In this instance, I’ve used price-to-book ratio (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that SBOT’s ratio of 1.5x is below its peer average of 4.4x, which suggests the stock is undervalued compared to the biotechnology industry. Although, there may be another chance to buy again in the future. This is because SBOT’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, SBOT’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will SBOT generate?
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. SBOT’s earnings over the next few years are expected to increase by 52.56%, 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 SBOT 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 SBOT for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SBOT. 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 buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Stellar Biotechnologies. You can find everything you need to know about SBOT in the latest infographic research report. If you are no longer interested in Stellar Biotechnologies, 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.
