When Should You Buy UP Global Sourcing Holdings plc (LON:UPGS)?

UP Global Sourcing Holdings plc (LON:UPGS), is not the largest company out there, but it saw a decent share price growth in the teens level on the LSE over the last few months. As a small cap stock, hardly covered by any analysts, 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 take a look at UP Global Sourcing Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for UP Global Sourcing Holdings

What is UP Global Sourcing Holdings worth?

UP Global Sourcing Holdings appears to be overvalued by 36% at the moment, based on my discounted cash flow valuation. The stock is currently priced at UK£1.46 on the market compared to my intrinsic value of £1.07. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since UP Global Sourcing Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.

What does the future of UP Global Sourcing Holdings 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. 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. In UP Global Sourcing Holdings' case, its revenues over the next few years are expected to grow by 34%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth 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 well and truly priced in UPGS’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe UPGS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on UPGS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for UPGS, which means it’s worth diving deeper into other factors 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 UP Global Sourcing Holdings at this point in time. At Simply Wall St, we found 4 warning signs for UP Global Sourcing Holdings and we think they deserve your attention.

If you are no longer interested in UP Global Sourcing Holdings, 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.