Stock Analysis

Is There Now An Opportunity In SRG Global Limited (ASX:SRG)?

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ASX:SRG
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SRG Global Limited (ASX:SRG), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the ASX. Less-covered, small caps tend to present 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 SRG Global’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for SRG Global

What is SRG Global worth?

Good news, investors! SRG Global is still a bargain right now. According to my valuation, the intrinsic value for the stock is A$0.77, but it is currently trading at AU$0.49 on the share market, meaning that there is still an opportunity to buy now. However, given that SRG Global’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of SRG Global look like?

earnings-and-revenue-growth
ASX:SRG Earnings and Revenue Growth February 17th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With revenues expected to grow by 34% over the next couple of years, the future seems bright for SRG Global. If the level of expenses is able to be maintained, 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? Since SRG is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on SRG for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SRG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you'd like to know more about SRG Global as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for SRG Global you should be aware of.

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Valuation is complex, but we're helping make it simple.

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