Why boohoo group plc (LON:BOO) Could Be Worth Watching

boohoo group plc (LON:BOO), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the AIM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at boohoo group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for boohoo group

Is boohoo group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.78% above my intrinsic value, which means if you buy boohoo group today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is £0.81, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that boohoo group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of boohoo group look like?

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. boohoo group's earnings over the next few years are expected to increase by 95%, 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 BOO’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 BOO, 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 further examining 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 boohoo group, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for boohoo group (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in boohoo group, 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.