While Solteq Oyj (HEL:SOLTEQ) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the HLSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Solteq Oyj’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Solteq Oyj
What is Solteq Oyj worth?
Good news, investors! Solteq Oyj is still a bargain right now. My valuation model shows that the intrinsic value for the stock is €4.08, but it is currently trading at €2.84 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Solteq Oyj’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 Solteq Oyj 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. With profit expected to grow by 36% over the next couple of years, the future seems bright for Solteq Oyj. 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? Since SOLTEQ is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on SOLTEQ for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SOLTEQ. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
If you want to dive deeper into Solteq Oyj, you'd also look into what risks it is currently facing. Our analysis shows 4 warning signs for Solteq Oyj (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.
If you are no longer interested in Solteq Oyj, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Promoted
When trading Solteq Oyj or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.