Should You Think About Buying Tornado Infrastructure Equipment Ltd. (CVE:TGH) Now?

Tornado Infrastructure Equipment Ltd. (CVE:TGH), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the TSXV over the last few months, increasing to CA$1.34 at one point, and dropping to the lows of CA$0.83. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Tornado Infrastructure Equipment's current trading price of CA$0.83 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tornado Infrastructure Equipment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Tornado Infrastructure Equipment

What's The Opportunity In Tornado Infrastructure Equipment?

Great news for investors – Tornado Infrastructure Equipment is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.94x is currently well-below the industry average of 32.23x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Tornado Infrastructure Equipment’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Tornado Infrastructure Equipment generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Tornado Infrastructure Equipment's revenue growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since TGH is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on TGH for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TGH. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

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

If you are no longer interested in Tornado Infrastructure Equipment, 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.