Should You Think About Buying Trifast plc (LON:TRI) Now?

Trifast plc (LON:TRI), might not be a large cap stock, but it led the LSE gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, 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 Trifast’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Trifast

Is Trifast still cheap?

Great news for investors – Trifast is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is £1.90, but it is currently trading at UK£1.25 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Trifast’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 Trifast?

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. However, with a relatively muted revenue growth of 3.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Trifast, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since TRI is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on TRI for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy TRI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Trifast at this point in time. Be aware that Trifast is showing 2 warning signs in our investment analysis and 1 of those is concerning...

If you are no longer interested in Trifast, 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. 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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