When Should You Buy Trisul S.A. (BVMF:TRIS3)?

Trisul S.A. (BVMF:TRIS3), is not the largest company out there, but it saw a decent share price growth in the teens level on the BOVESPA 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 Trisul’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Trisul

Is Trisul still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.3% below my intrinsic value, which means if you buy Trisul today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth R$10.33, then there’s not much of an upside to gain from mispricing. What's more, Trisul’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Trisul generate?

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 98% over the next couple of years, the future seems bright for Trisul. 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? TRIS3’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 TRIS3, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Trisul as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Trisul (including 2 which are a bit concerning).

If you are no longer interested in Trisul, 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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