ISDN Holdings Limited (SGX:I07), a electrical company based in Singapore, received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to SGD0.24 at one point, and dropping to the lows of SGD0.21. 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 ISDN Holdings’s current trading price of SGD0.22 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 ISDN Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for ISDN Holdings
Is ISDN Holdings still cheap?
According to my valuation model, the stock is currently overvalued by about 77%, trading at S$0.21 compared to my intrinsic value of SGD0.12. This means that the opportunity to buy ISDN Holdings at a good price has disappeared! In addition to this, it seems like ISDN Holdings’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will ISDN Holdings generate?
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. With profit expected to grow by 49.26% over the next couple of years, the future seems bright for ISDN Holdings. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? I07’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe I07 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on I07 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for I07, which means it’s worth diving deeper into other factors 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 ISDN Holdings. You can find everything you need to know about ISDN Holdings in the latest infographic research report. If you are no longer interested in ISDN Holdings, 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.