Should You Investigate Sirius Real Estate Limited (LON:SRE) At UK£0.95?

Sirius Real Estate Limited (LON:SRE), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the LSE. The recent jump in the share price has meant that the company is trading around its 52-week high. 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 Sirius Real Estate’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Sirius Real Estate

Is Sirius Real Estate Still Cheap?

According to our valuation model, Sirius Real Estate seems to be fairly priced at around 11.48% above our intrinsic value, which means if you buy Sirius Real Estate today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth £0.85, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Sirius Real Estate’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Sirius Real Estate generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Sirius Real Estate'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 SRE’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 track record of its management team. 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 SRE, now may not be the most optimal 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 5 warning signs for Sirius Real Estate you should be mindful of and 1 of them is a bit concerning.

If you are no longer interested in Sirius Real Estate, 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.