Should You Investigate Rubberex Corporation (M) Berhad (KLSE:RUBEREX) At RM0.57?

Rubberex Corporation (M) Berhad (KLSE:RUBEREX), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the KLSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Rubberex Corporation (M) Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Rubberex Corporation (M) Berhad

What's the opportunity in Rubberex Corporation (M) Berhad?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15.46% above my intrinsic value, which means if you buy Rubberex Corporation (M) Berhad today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is MYR0.50, there’s only an insignificant downside when the price falls to its real value. Furthermore, Rubberex Corporation (M) Berhad’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Rubberex Corporation (M) Berhad?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Rubberex Corporation (M) Berhad, at least in the near future.

What this means for you:

Are you a shareholder? Currently, RUBEREX appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on RUBEREX for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on RUBEREX should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 4 warning signs we've spotted with Rubberex Corporation (M) Berhad (including 2 which make us uncomfortable).

If you are no longer interested in Rubberex Corporation (M) Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

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