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Have Investors Already Priced In Serica Energy PLC’s (AIM:SQZ) Growth?

Serica Energy PLC (AIM:SQZ), an energy company based in United Kingdom, received a lot of attention from a substantial price increase on the AIM in the over the last few months. Less covered, small-stocks like SQZ sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could SQZ still be trading at a low price relative to its actual value? Let’s take a look at SQZ’s outlook and value based on the most recent financial data to see if the opportunity still exists. View our latest analysis for Serica Energy

Is SQZ still cheap?

Good news, investors! SQZ is still a bargain right now. According to my valuation, the intrinsic value for the stock is £0.74, but it is currently trading at £0.29 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, SQZ’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because SQZ’s stock is less volatile than the wider market given its low beta.

What kind of growth will SQZ generate?

AIM:SQZ Future Profit Nov 6th 17
AIM:SQZ Future Profit Nov 6th 17

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. 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 SQZ future expectations. Though in the case of SQZ, it is expected to deliver a negative revenue growth of -6.96% next year, 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 SQZ 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 SQZ, 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 SQZ for some time, but hesitant on making the leap, I recommend you research further 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 Serica Energy. You can find everything you need to know about SQZ in the latest infographic research report. If you are no longer interested in Serica Energy, 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.

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