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While Gateley (Holdings) Plc (LON:GTLY) might not be the most widely known stock at the moment, it led the AIM gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Gateley (Holdings)’s outlook and valuation to see if the opportunity still exists.
What's the opportunity in Gateley (Holdings)?
Gateley (Holdings) appears to be overvalued by 23% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£1.83 on the market compared to my intrinsic value of £1.49. This means that the opportunity to buy Gateley (Holdings) at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Gateley (Holdings)’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 Gateley (Holdings)?
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. However, with a negative profit growth of -11% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Gateley (Holdings). This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? If you believe GTLY 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. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 GTLY for a while, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky 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?
It can be quite valuable to consider what analysts expect for Gateley (Holdings) from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.
If you are no longer interested in Gateley (Holdings), you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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