At €1.25, Is It Time To Put Lehto Group Oyj (HEL:LEHTO) On Your Watch List?

Lehto Group Oyj (HEL:LEHTO), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the HLSE. Less-covered, small caps sees 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 Lehto Group Oyj’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Lehto Group Oyj

What's the opportunity in Lehto Group Oyj?

Great news for investors – Lehto Group Oyj is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €1.94, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Lehto Group Oyj’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Lehto Group Oyj?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an expected decline of -19% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Lehto Group Oyj. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although LEHTO is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to LEHTO, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on LEHTO for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that Lehto Group Oyj has 2 warning signs and it would be unwise to ignore them.

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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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