Alliance Resource Partners LP (NASDAQ:ARLP), an energy company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Alliance Resource Partners’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for Alliance Resource Partners
What is Alliance Resource Partners worth?
Great news for investors – Alliance Resource Partners is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $41.87, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Alliance Resource Partners’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Alliance Resource Partners generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 the company’s future expectations. Though in the case of Alliance Resource Partners, it is expected to deliver a negative earnings growth of -16.55%, 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? Although Alliance Resource Partners is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to Alliance Resource Partners, 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 an eye on Alliance Resource Partners for a while, but hesitant on making the leap, I recommend you research further 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 Alliance Resource Partners. You can find everything you need to know about Alliance Resource Partners in the latest infographic research report. If you are no longer interested in Alliance Resource Partners, 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.