Stock Analysis

Is Now An Opportune Moment To Examine Healthia Limited (ASX:HLA)?

ASX:HLA
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Healthia Limited (ASX:HLA), is not the largest company out there, but it saw a decent share price growth in the teens level on the ASX over the last few months. 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 Healthia’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Healthia

What's the opportunity in Healthia?

Healthia appears to be overvalued by 37% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$1.80 on the market compared to my intrinsic value of A$1.32. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Healthia’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 kind of growth will Healthia generate?

earnings-and-revenue-growth
ASX:HLA Earnings and Revenue Growth May 19th 2021

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. With profit expected to grow by 92% over the next couple of years, the future seems bright for Healthia. 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? HLA’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe HLA 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 HLA 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 HLA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 3 warning signs for Healthia you should be mindful of and 1 of these is a bit unpleasant.

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

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

Find out whether Healthia is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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