MLP SE (DB:MLP), a capital markets company based in Germany, saw a decent share price growth in the teens level on the DB over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine MLP’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for MLP
Is MLP still cheap?According to my valuation model, the stock is currently overvalued by about 79%, trading at €5.61 compared to my intrinsic value of €3.14. Not the best news for investors looking to buy! Another thing to keep in mind is that MLP’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 intrinsic value over time, 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 MLP 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. MLP’s earnings over the next few years are expected to increase by 39.41%, 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 well and truly priced in MLP’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MLP should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MLP for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for MLP, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MLP. You can find everything you need to know about MLP in the latest infographic research report. If you are no longer interested in MLP, you can use our free platform to see my list of over 50 other stocks with a high growth potential.