When Should You Buy Detection Technology Oyj (HEL:DETEC)?

Detection Technology Oyj (HEL:DETEC), 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 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? Let’s examine Detection Technology Oyj’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Detection Technology Oyj

Is Detection Technology Oyj Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.3% below my intrinsic value, which means if you buy Detection Technology Oyj today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth €19.50, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Detection Technology Oyj’s low beta implies that the stock is less volatile than the wider market.

What does the future of Detection Technology Oyj 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. Detection Technology Oyj'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 DETEC’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 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 tabs on DETEC, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Detection Technology Oyj you should be aware of.

If you are no longer interested in Detection Technology Oyj, 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.