At CL$1,099, Is It Time To Put Forus S.A. (SNSE:FORUS) On Your Watch List?

Forus S.A. (SNSE:FORUS), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the SNSE. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Forus’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Forus

What's the opportunity in Forus?

According to my valuation model, Forus seems to be fairly priced at around 19.66% above my intrinsic value, which means if you buy Forus today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is CLP918.79, 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 Forus’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 does the future of Forus look like?

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. With profit expected to more than double over the next couple of years, the future seems bright for Forus. 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? FORUS’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 financial strength of the company. 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 an eye on FORUS, now may not be the most advantageous 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 Forus, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with Forus, and understanding these should be part of your investment process.

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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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