What Is Tourmaline Oil Corp’s (TSE:TOU) Share Price Doing?
Tourmaline Oil Corp (TSX:TOU), an energy company based in Canada, received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$24.74 at one point, and dropping to the lows of CA$18.38. 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 Tourmaline Oil’s current trading price of CA$18.46 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 Tourmaline Oil’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Tourmaline Oil
Is Tourmaline Oil still cheap?
Tourmaline Oil appears to be overvalued by 25% at the moment, based on my discounted cash flow valuation. The stock is currently priced at CA$18.46 on the market compared to my intrinsic value of CA$14.75. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Tourmaline Oil’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 Tourmaline Oil?
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 Tourmaline Oil, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? If you believe TOU is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 tabs on TOU for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Tourmaline Oil. You can find everything you need to know about Tourmaline Oil in the latest infographic research report. If you are no longer interested in Tourmaline Oil, 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.
