Jastrzebska Spólka Weglowa SA. (WSE:JSW), a metals and mining company based in Poland, received a lot of attention from a substantial price movement on the WSE over the last few months, increasing to PLN101.6 at one point, and dropping to the lows of PLN78.42. 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 Jastrzebska Spólka Weglowa’s current trading price of PLN83 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Jastrzebska Spólka Weglowa’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 Jastrzebska Spólka Weglowa
What’s the opportunity in Jastrzebska Spólka Weglowa?
According to my valuation model, Jastrzebska Spólka Weglowa seems to be fairly priced at around 10.52% below my intrinsic value, which means if you buy Jastrzebska Spólka Weglowa today, you’d be paying a fair price for it. And if you believe the company’s true value is PLN92.76, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Jastrzebska Spólka Weglowa’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Jastrzebska Spólka Weglowa 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Jastrzebska Spólka Weglowa, at least in the near future.
What this means for you:
Are you a shareholder? JSW seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on JSW for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on JSW should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Jastrzebska Spólka Weglowa. You can find everything you need to know about Jastrzebska Spólka Weglowa in the latest infographic research report. If you are no longer interested in Jastrzebska Spólka Weglowa, 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.