At RM0.23, Is It Time To Put I-Berhad (KLSE:IBHD) On Your Watch List?

I-Berhad (KLSE:IBHD), is not the largest company out there, but it received a lot of attention from a substantial price increase on the KLSE over the last few months. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at I-Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for I-Berhad

Is I-Berhad still cheap?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 59.87x is currently well-above the industry average of 12.38x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since I-Berhad’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of I-Berhad look like?

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. In I-Berhad's case, its revenues over the next few years are expected to grow by 76%, indicating a highly 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? It seems like the market has well and truly priced in IBHD’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe IBHD should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on IBHD for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for IBHD, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into I-Berhad, you'd also look into what risks it is currently facing. Case in point: We've spotted 6 warning signs for I-Berhad you should be mindful of and 1 of these shouldn't be ignored.

If you are no longer interested in I-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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