Should You Buy Whitehaven Coal Limited (ASX:WHC) At $3.84?
Whitehaven Coal Limited (ASX:WHC), an energy company based in Australia, saw a double-digit share price rise of over 10% in the past couple of months on the ASX. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on WHC’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Whitehaven Coal
What is WHC worth?
Great news for investors – WHC is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is A$5.85, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, WHC’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much WHC moves relative to the rest of the market.
What does the future of WHC 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. Though in the case of WHC, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although WHC is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to WHC, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on WHC for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Whitehaven Coal. You can find everything you need to know about WHC in the latest infographic research report. If you are no longer interested in Whitehaven Coal, 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.
