Is It Too Late To Consider Buying Chartwell Retirement Residences (TSE:CSH.UN)?

Chartwell Retirement Residences (TSE:CSH.UN), is not the largest company out there, but it saw a decent share price growth in the teens level on the TSX over the last few months. As a small cap stock, hardly covered by any analysts, 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 take a look at Chartwell Retirement Residences’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Chartwell Retirement Residences

What Is Chartwell Retirement Residences Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.57% above my intrinsic value, which means if you buy Chartwell Retirement Residences today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CA$9.85, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Chartwell Retirement Residences’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.

What kind of growth will Chartwell Retirement Residences 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. Though in the case of Chartwell Retirement Residences, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? CSH.UN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CSH.UN for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on CSH.UN should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. When we did our research, we found 3 warning signs for Chartwell Retirement Residences (2 are concerning!) that we believe deserve your full attention.

If you are no longer interested in Chartwell Retirement Residences, 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.