Stock Analysis

Is There Now An Opportunity In 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 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? Let’s take a look at Healthia’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Healthia

Is Healthia still cheap?

Healthia appears to be overvalued by 32% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$2.00 on the market compared to my intrinsic value of A$1.51. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline 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 February 9th 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 profit expected to more than double 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? It seems like the market has well and truly priced in HLA’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 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 an eye on HLA 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 HLA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Healthia as a business, it's important to be aware of any risks it's facing. Our analysis shows 4 warning signs for Healthia (1 makes us a bit uncomfortable!) and we strongly recommend you look at these before investing.

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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