Is Now The Time To Look At Buying RediShred Capital Corp. (CVE:KUT)?

RediShred Capital Corp. (CVE:KUT), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the TSXV over the last few months. As a small cap stock, which tends to lack high analyst coverage, 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 RediShred Capital’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for RediShred Capital

What is RediShred Capital worth?

Good news, investors! RediShred Capital is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$0.67, but it is currently trading at CA$0.51 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that RediShred Capital’s share price may be 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 RediShred Capital 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. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for RediShred Capital, at least in the near future.

What this means for you:

Are you a shareholder? Although KUT is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to KUT, 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 tabs on KUT for some time, but hesitant on making the leap, I recommend you dig deeper 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 4 warning signs we've spotted with RediShred Capital (including 1 which shouldn't be ignored).

If you are no longer interested in RediShred Capital, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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