At UK£32.00, Is Best of the Best PLC (LON:BOTB) Worth Looking At Closely?

While Best of the Best PLC (LON:BOTB) 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. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Best of the Best’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Best of the Best

Is Best of the Best still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15.08% above my intrinsic value, which means if you buy Best of the Best today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is £27.81, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Best of the Best has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Best of the Best?

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. Best of the Best's earnings over the next few years are expected to increase by 81%, 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? BOTB’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 BOTB, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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 Best of the Best, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Best of the Best and we think they deserve your attention.

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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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