Is Now The Time To Look At Buying Eneraqua Technologies plc (LON:ETP)?

While Eneraqua Technologies plc (LON:ETP) might not be the most widely known stock at the moment, it led the AIM gainers with a relatively large price hike in the past couple of weeks. 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 Eneraqua Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Eneraqua Technologies

What's The Opportunity In Eneraqua Technologies?

According to my valuation model, Eneraqua Technologies seems to be fairly priced at around 17% below my intrinsic value, which means if you buy Eneraqua Technologies today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth £0.82, then there’s not much of an upside to gain from mispricing. What's more, Eneraqua Technologies’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Eneraqua Technologies?

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. 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. With revenues expected to grow by 58% over the next couple of years, the future seems bright for Eneraqua Technologies. If the level of expenses is able to be maintained, 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? ETP’s optimistic future growth appears to have been factored into the current share price, 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 an eye on ETP, 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 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 want to dive deeper into Eneraqua Technologies, you'd also look into what risks it is currently facing. Be aware that Eneraqua Technologies is showing 2 warning signs in our investment analysis and 1 of those is a bit unpleasant...

If you are no longer interested in Eneraqua Technologies, 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.