Is It The Right Time To Buy BlueScope Steel Limited (ASX:BSL)?
BlueScope Steel Limited (ASX:BSL), a metals and mining company based in Australia, led the ASX gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on BlueScope Steel’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for BlueScope Steel
What’s the opportunity in BlueScope Steel?
Great news for investors – BlueScope Steel is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$26.08, but it is currently trading at AU$17.71 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that BlueScope Steel’s share price is 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.
Can we expect growth from BlueScope Steel?
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. Though in the case of BlueScope Steel, it is expected to deliver a relatively unexciting earnings growth of 3.26%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since BSL is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on BSL for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BSL. 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on BlueScope Steel. You can find everything you need to know about BlueScope Steel in the latest infographic research report. If you are no longer interested in BlueScope Steel, 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.
