Is There Now An Opportunity In EITA Resources Berhad (KLSE:EITA)?

EITA Resources Berhad (KLSE:EITA), is not the largest company out there, but it saw significant share price movement during recent months on the KLSE, rising to highs of RM1.80 and falling to the lows of RM0.84. 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 EITA Resources Berhad's current trading price of RM0.86 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 EITA Resources Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for EITA Resources Berhad

What's the opportunity in EITA Resources Berhad?

The stock is currently trading at RM0.86 on the share market, which means it is overvalued by 37% compared to my intrinsic value of MYR0.63. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that EITA Resources Berhad’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of EITA Resources Berhad look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 56% over the next couple of years, the future seems bright for EITA Resources Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? EITA’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe EITA 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 EITA 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 positive outlook is encouraging for EITA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about EITA Resources Berhad as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with EITA Resources Berhad, and understanding these should be part of your investment process.

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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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