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At CA$17.00, Is It Time To Put Westshore Terminals Investment Corporation (TSE:WTE) On Your Watch List?

Simply Wall St

Westshore Terminals Investment Corporation (TSE:WTE), which is in the infrastructure business, and is based in Canada, saw significant share price movement during recent months on the TSX, rising to highs of CA$23.48 and falling to the lows of CA$16.24. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Westshore Terminals Investment's current trading price of CA$17.00 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 Westshore Terminals Investment’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 Westshore Terminals Investment

What's the opportunity in Westshore Terminals Investment?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12% below my intrinsic value, which means if you buy Westshore Terminals Investment today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$19.24, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Westshore Terminals Investment’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, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Westshore Terminals Investment?

TSX:WTE Past and Future Earnings, January 14th 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. However, with a negative profit growth of -17% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Westshore Terminals Investment. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Currently, WTE appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on WTE for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on WTE should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Westshore Terminals Investment. You can find everything you need to know about Westshore Terminals Investment in the latest infographic research report. If you are no longer interested in Westshore Terminals Investment, 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.