Is There Now An Opportunity In Jaya Tiasa Holdings Berhad (KLSE:JTIASA)?

Jaya Tiasa Holdings Berhad (KLSE:JTIASA), is not the largest company out there, 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? Today I will analyse the most recent data on Jaya Tiasa Holdings Berhad’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Jaya Tiasa Holdings Berhad

What Is Jaya Tiasa Holdings Berhad Worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 5.43x is currently trading slightly below its industry peers’ ratio of 7.86x, which means if you buy Jaya Tiasa Holdings Berhad today, you’d be paying a decent price for it. And if you believe Jaya Tiasa Holdings Berhad should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Jaya Tiasa Holdings 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Jaya Tiasa Holdings 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. Though in the case of Jaya Tiasa Holdings Berhad, it is expected to deliver a negative earnings growth of -5.5%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, JTIASA appears to be trading around industry price multiples, 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 beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on JTIASA, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on JTIASA for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, 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 gel your views on JTIASA should the price fluctuate below the industry PE ratio.

If you'd like to know more about Jaya Tiasa Holdings Berhad as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for Jaya Tiasa Holdings Berhad and we think they deserve your attention.

If you are no longer interested in Jaya Tiasa 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. 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.