TSO3 Inc (TSE:TOS), which is in the medical equipment business, and is based in Canada, received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$0.85 at one point, and dropping to the lows of CA$0.40. 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 TSO3’s current trading price of CA$0.40 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 TSO3’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is TSO3 worth?
According to my valuation model, TSO3 seems to be fairly priced at around 9.1% below my intrinsic value, which means if you buy TSO3 today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$0.44, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like TSO3’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of TSO3 look like?
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. With revenue expected to more than double in the next few years, the future appears to be extremely bright for TSO3. If expenses can also be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? TOS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on TOS, 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 diving deeper into 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 TSO3. You can find everything you need to know about TSO3 in the latest infographic research report. If you are no longer interested in TSO3, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.