Why Bioalpha Holdings Berhad (KLSE:BIOHLDG) Could Be Worth Watching

Bioalpha Holdings Berhad (KLSE:BIOHLDG), might not be a large cap stock, but it saw significant share price movement during recent months on the KLSE, rising to highs of RM0.30 and falling to the lows of RM0.21. 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 Bioalpha Holdings Berhad's current trading price of RM0.23 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 Bioalpha Holdings Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Bioalpha Holdings Berhad

What's the opportunity in Bioalpha Holdings Berhad?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.6% below my intrinsic value, which means if you buy Bioalpha Holdings Berhad today, you’d be paying a fair price for it. And if you believe the company’s true value is MYR0.26, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Bioalpha Holdings Berhad’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 Bioalpha Holdings Berhad generate?

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. In Bioalpha Holdings Berhad's case, its revenues over the next couple of years are expected to double, indicating an incredibly 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? BIOHLDG’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on BIOHLDG, now may not be the most advantageous 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 diving deeper into other factors such as the strength of its balance sheet, 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 Bioalpha Holdings Berhad at this point in time. For example - Bioalpha Holdings Berhad has 3 warning signs we think you should be aware of.

If you are no longer interested in Bioalpha Holdings Berhad, 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. 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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