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While mdf commerce inc. (TSE:MDF) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the TSX, rising to highs of CA$5.64 and falling to the lows of CA$3.14. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether mdf commerce's current trading price of CA$3.16 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at mdf commerce’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for mdf commerce
Is mdf commerce still cheap?
mdf commerce appears to be overvalued by 34% at the moment, based on my discounted cash flow valuation. The stock is currently priced at CA$3.16 on the market compared to my intrinsic value of CA$2.37. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since mdf commerce’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.
What does the future of mdf commerce look like?
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 grow by 26% over the next year, the near-term future seems bright for mdf commerce. 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 well and truly priced in MDF’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 MDF 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 an eye on MDF for a while, 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 optimistic prospect is encouraging for MDF, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.