Is Now An Opportune Moment To Examine PriceSmart, Inc. (NASDAQ:PSMT)?
PriceSmart, Inc. (NASDAQ:PSMT), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a US$2.3b market cap stock, it seems odd PriceSmart is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on PriceSmart’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for PriceSmart
What's The Opportunity In PriceSmart?
Great news for investors – PriceSmart is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $115.71, but it is currently trading at US$74.99 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that PriceSmart’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What does the future of PriceSmart look like?
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. 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 a double-digit 14% in the upcoming year, the short-term outlook is positive for PriceSmart. 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? Since PSMT is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PSMT for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PSMT. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
If you'd like to know more about PriceSmart as a business, it's important to be aware of any risks it's facing. For example - PriceSmart has 1 warning sign we think you should be aware of.
If you are no longer interested in PriceSmart, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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