Mecelec Composites SA (EPA:ALMEC), which is in the electrical business, and is based in France, saw significant share price movement during recent months on the ENXTPA, rising to highs of €2.34 and falling to the lows of €2.04. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mecelec Composites's current trading price of €2.18 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 Mecelec Composites’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Mecelec Composites still cheap?
Mecelec Composites appears to be overvalued by 32% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €2.18 on the market compared to my intrinsic value of €1.65. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Mecelec Composites’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Mecelec Composites 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 more than double over the next couple of years, the future seems bright for Mecelec Composites. 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? It seems like the market has well and truly priced in ALMEC’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ALMEC should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on ALMEC for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for ALMEC, which means it’s worth diving deeper into other factors 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 Mecelec Composites. You can find everything you need to know about Mecelec Composites in the latest infographic research report. If you are no longer interested in Mecelec Composites, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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