When Should You Buy SPECO Ltd. (KOSDAQ:013810)?

While SPECO Ltd. (KOSDAQ:013810) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KOSDAQ, rising to highs of ₩11,950 and falling to the lows of ₩8,670. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether SPECO's current trading price of ₩8,920 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at SPECO’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for SPECO

Is SPECO still cheap?

According to my valuation model, SPECO seems to be fairly priced at around 7.6% below my intrinsic value, which means if you buy SPECO today, you’d be paying a fair price for it. And if you believe that the stock is really worth ₩9655.67, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because SPECO’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 SPECO 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 SPECO's case, its revenues over the next few years are expected to grow by 71%, 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 already priced in A013810’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on A013810, now may not be the most optimal 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'd like to know more about SPECO as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for SPECO you should be aware of.

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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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