Is Now The Time To Look At Buying Eco World International Berhad (KLSE:EWINT)?

Eco World International Berhad (KLSE:EWINT), 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 take a look at Eco World International Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Eco World International Berhad

What is Eco World International Berhad worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.12% above my intrinsic value, which means if you buy Eco World International Berhad today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is MYR0.55, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Eco World International 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 Eco World International Berhad generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 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 Eco World International Berhad, at least in the near future.

What this means for you:

Are you a shareholder? EWINT seems fairly priced right now, 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 EWINT 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 EWINT 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. For example, Eco World International Berhad has 5 warning signs (and 1 which is concerning) we think you should know about.

If you are no longer interested in Eco World International 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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