Duty Free International Limited (SGX:5SO), a specialty retail company based in Singapore, saw a decent share price growth in the teens level on the SGX over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Duty Free International’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Duty Free International
What’s the opportunity in Duty Free International?
Good news, investors! Duty Free International is still a bargain right now. My valuation model shows that the intrinsic value for the stock is SGD0.57, but it is currently trading at SGD0.28 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Duty Free International’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Duty Free International 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 the company’s future expectations. However, with a relatively muted profit growth of 9.32% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Duty Free International, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since Duty Free International is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on Duty Free International for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy Duty Free International. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.