Should You Investigate Russel Metals Inc. (TSE:RUS) At CA$37.80?

While Russel Metals Inc. (TSE:RUS) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Russel Metals’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Russel Metals

Is Russel Metals Still Cheap?

Great news for investors – Russel Metals is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CA$48.23, but it is currently trading at CA$37.80 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Russel Metals’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Russel Metals 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. However, with an expected decline of -8.6% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Russel Metals. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although RUS is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to RUS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on RUS for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Diving deeper into the forecasts for Russel Metals mentioned earlier will help you understand how analysts view the stock going forward. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Russel Metals, 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.