Is Now An Opportune Moment To Examine SDI Group plc (LON:SDI)?

While SDI Group plc (LON:SDI) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the AIM over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. 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? Today we will analyse the most recent data on SDI Group’s outlook and valuation to see if the opportunity still exists.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

What's The Opportunity In SDI Group?

The stock is currently trading at UK£1.02 on the share market, which means it is overvalued by 28% compared to our intrinsic value of £0.79. This means that the opportunity to buy SDI Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since SDI Group’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.

Check out our latest analysis for SDI Group

What kind of growth will SDI Group 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. In the upcoming year, SDI Group's earnings are expected to increase by 23%, 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 well and truly priced in SDI’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe SDI 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 tabs on SDI for some time, 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 SDI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into SDI Group, you'd also look into what risks it is currently facing. For example - SDI Group has 1 warning sign we think you should be aware of.

If you are no longer interested in SDI Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.