What Does Cargotec Corporation's (HEL:CGCBV) Share Price Indicate?

Cargotec Corporation (HEL:CGCBV), is not the largest company out there, but it led the HLSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Cargotec’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Cargotec

Is Cargotec Still Cheap?

According to my valuation model, Cargotec seems to be fairly priced at around 17% below my intrinsic value, which means if you buy Cargotec today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €59.92, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Cargotec’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Cargotec 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. Cargotec's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger 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 CGCBV’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 track record of its management team. 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 tabs on CGCBV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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'd like to know more about Cargotec as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 5 warning signs for Cargotec and you'll want to know about them.

If you are no longer interested in Cargotec, 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.