Should You Think About Buying Lovisa Holdings Limited (ASX:LOV) Now?

Lovisa Holdings Limited (ASX:LOV), might not be a large cap stock, but it saw a decent share price growth of 17% on the ASX over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Lovisa Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

We've discovered 1 warning sign about Lovisa Holdings. View them for free.

What Is Lovisa Holdings Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.2% below our intrinsic value, which means if you buy Lovisa Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$26.32, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Lovisa Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

View our latest analysis for Lovisa Holdings

Can we expect growth from Lovisa Holdings?

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 58% over the next couple of years, the future seems bright for Lovisa Holdings. 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 already priced in LOV’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on LOV, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Lovisa Holdings, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Lovisa Holdings you should be aware of.

If you are no longer interested in Lovisa Holdings, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.