Is There Now An Opportunity In GUD Holdings Limited (ASX:GUD)?
GUD Holdings Limited (ASX:GUD), a consumer durables and apparel company based in Australia, saw significant share price volatility over the past couple of months on the ASX, rising to the highs of $13.22 and falling to the lows of $10.77. 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 GUD's current trading price of $10.77 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 GUD’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 GUD Holdings
What is GUD worth?
According to my valuation model, GUD seems to be fairly priced at around 12% below my intrinsic value, which means if you buy GUD today, you’d be paying a fair price for it. And if you believe that GUD is really worth $12.01, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like GUD’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 GUD’s stock is less volatile than the wider market given its low beta.
What does the future of GUD 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 GUD future expectations. With revenues expected to grow by a double-digit 18.56% over the next couple of years, the outlook is positive for GUD. If the level of expenses is able to be maintained, 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? It seems like the market has already priced in GUD’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at GUD? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on GUD, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for GUD, 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 GUD Holdings. You can find everything you need to know about GUD in the latest infographic research report. If you are no longer interested in GUD 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.
