When Should You Buy Muhibbah Engineering (M) Bhd. (KLSE:MUHIBAH)?

Muhibbah Engineering (M) Bhd. (KLSE:MUHIBAH), is not the largest company out there, but it received a lot of attention from a substantial price increase on the KLSE over the last few months. 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 I will analyse the most recent data on Muhibbah Engineering (M) Bhd’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Muhibbah Engineering (M) Bhd

What's The Opportunity In Muhibbah Engineering (M) Bhd?

Great news for investors – Muhibbah Engineering (M) Bhd is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is MYR1.07, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Muhibbah Engineering (M) Bhd’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

Can we expect growth from Muhibbah Engineering (M) Bhd?

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 revenues expected to grow by 31% over the next couple of years, the future seems bright for Muhibbah Engineering (M) Bhd. If the level of expenses is able to be maintained, 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? Since MUHIBAH is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MUHIBAH for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MUHIBAH. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Muhibbah Engineering (M) Bhd you should be aware of.

If you are no longer interested in Muhibbah Engineering (M) Bhd, 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.