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When Should You Buy Stuart Olson Inc. (TSE:SOX)?

Simply Wall St

Stuart Olson Inc. (TSE:SOX), which is in the construction business, and is based in Canada, received a lot of attention from a substantial price increase on the TSX over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Stuart Olson’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Stuart Olson

Is Stuart Olson still cheap?

Great news for investors – Stuart Olson is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is CA$4.41, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Stuart Olson’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Stuart Olson?

TSX:SOX Past and Future Earnings, February 20th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Stuart Olson, it is expected to deliver a relatively unexciting top-line growth of 7.3% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since SOX is currently undervalued, it may be a great time to increase your holdings in the stock. 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 SOX for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SOX. 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 Stuart Olson. You can find everything you need to know about Stuart Olson in the latest infographic research report. If you are no longer interested in Stuart Olson, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.