Jadason Enterprises Ltd (SGX:J03), a electronic company based in Singapore, saw a double-digit share price rise of over 10% in the past couple of months on the SGX. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Jadason Enterprises’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Jadason Enterprises
Is Jadason Enterprises still cheap?
Jadason Enterprises appears to be overpriced by 40% at the moment, based on my discounted cash flow valuation. The stock is currently priced at SGD0.08 on the market compared to my intrinsic value of SGD0.05. This means that the opportunity to buy Jadason Enterprises 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 Jadason Enterprises’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 Jadason Enterprises?
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. Jadason Enterprises’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in Jadason Enterprises’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe Jadason Enterprises 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. 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 Jadason Enterprises for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for Jadason Enterprises, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.