Ardmore Shipping Corporation (NYSE:ASC), a energy company based in Bermuda, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $8.5 and falling to the lows of $7.2. 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 ASC's current trading price of $7.7 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 ASC’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 ASC
What's the opportunity in ASC?
Good news, investors! ASC is still a bargain right now. According to my valuation, the intrinsic value for the stock is $14.03 which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, ASC’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much ASC moves relative to the rest of the market.
What does the future of ASC 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.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 ASC future expectations. However, with an expected decline of -7.59% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for ASC. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although ASC is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to ASC, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on ASC for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ardmore Shipping. You can find everything you need to know about ASC in the latest infographic research report. If you are no longer interested in Ardmore Shipping, 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.