Stock Analysis

What Is Rubberex Corporation (M) Berhad's (KLSE:RUBEREX) Share Price Doing?

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KLSE:HEXCARE
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Rubberex Corporation (M) Berhad (KLSE:RUBEREX), might not be a large cap stock, but it led the KLSE gainers with a relatively large price hike in the past couple of weeks. 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.

View our latest analysis for Rubberex Corporation (M) Berhad

Is Rubberex Corporation (M) Berhad still cheap?

Good news, investors! Rubberex Corporation (M) Berhad is still a bargain right now. My valuation model shows that the intrinsic value for the stock is MYR1.70, but it is currently trading at RM1.22 on the share market, meaning that there is still an opportunity to buy now. Rubberex Corporation (M) Berhad’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Rubberex Corporation (M) Berhad look like?

earnings-and-revenue-growth
KLSE:RUBEREX Earnings and Revenue Growth April 12th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Rubberex Corporation (M) Berhad. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although RUBEREX is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to RUBEREX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on RUBEREX for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Rubberex Corporation (M) Berhad as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for Rubberex Corporation (M) Berhad (1 makes us a bit uncomfortable!) that we believe deserve your full attention.

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