In This Article:
Avensia AB (publ) (STO:AVEN), which is in the software business, and is based in Sweden, saw a significant share price rise of over 20% in the past couple of months on the OM. 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? Today I will analyse the most recent data on Avensia’s outlook and valuation to see if the opportunity still exists.
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Check out our latest analysis for Avensia
What is Avensia worth?
According to my valuation model, Avensia seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Avensia today, you’d be paying a fair price for it. And if you believe that the stock is really worth SEK23.28, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Avensia’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What kind of growth will Avensia generate?
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. With profit expected to more than double over the next couple of years, the future seems bright for Avensia. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in AVEN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AVEN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.