Is There Now An Opportunity In HydroDec Group plc (LON:HYR)?

HydroDec Group plc (AIM:HYR), an energy company based in United Kingdom, received a lot of attention from a substantial price movement on the AIM in the over the last few months, increasing to £0.03 at one point, and dropping to the lows of £0.02. 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 HydroDec Group’s current trading price of £0.02 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 HydroDec Group’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 HydroDec Group

What’s the opportunity in HydroDec Group?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 1.56x is currently trading slightly above its industry peers’ ratio of 0.83x, which means if you buy HydroDec Group today, you’d be paying a relatively reasonable price for it. And if you believe that HydroDec Group should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since HydroDec Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from HydroDec Group?

AIM:HYR Future Profit Feb 19th 18
AIM:HYR Future Profit Feb 19th 18

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. HydroDec Group’s earnings over the next few years are expected to increase by 82.07%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? HYR’s optimistic future growth appears to have been factored into the current share price, 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 HYR? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on HYR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for HYR, which means it’s worth further examining 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 HydroDec Group. You can find everything you need to know about HydroDec Group in the latest infographic research report. If you are no longer interested in HydroDec Group, 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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