At UK£5.95, Is Keystone Law Group plc (LON:KEYS) Worth Looking At Closely?

While Keystone Law Group plc (LON:KEYS) 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. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Keystone Law Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Keystone Law Group

Is Keystone Law Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12.85% above my intrinsic value, which means if you buy Keystone Law Group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is £5.27, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Keystone Law Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Keystone Law Group look like?

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. 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. Keystone Law Group's earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust 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 KEYS’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on KEYS, 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.

So while earnings quality is important, it's equally important to consider the risks facing Keystone Law Group at this point in time. While conducting our analysis, we found that Keystone Law Group has 1 warning sign and it would be unwise to ignore this.

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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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