Should You Investigate Absolute Software Corporation (TSE:ABST) At CA$18.65?

Absolute Software Corporation (TSE:ABST), is not the largest company out there, but 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. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Absolute Software’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Absolute Software

What's the opportunity in Absolute Software?

According to my valuation model, Absolute Software seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Absolute Software today, you’d be paying a reasonable price for it. And if you believe the company’s true value is CA$20.97, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Absolute Software has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Absolute Software 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. Absolute Software's earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in ABST’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ABST, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Absolute Software, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Absolute Software you should know about.

If you are no longer interested in Absolute Software, 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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