While Malaysia Airports Holdings Berhad (KLSE:AIRPORT) might not be the most widely known stock at the moment, it led the KLSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Malaysia Airports Holdings Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's the opportunity in Malaysia Airports Holdings Berhad?
The stock is currently trading at RM5.60 on the share market, which means it is overvalued by 25% compared to my intrinsic value of MYR4.48. This means that the opportunity to buy Malaysia Airports Holdings Berhad at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Malaysia Airports 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Malaysia Airports Holdings Berhad?
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. With profit expected to grow by 44% over the next year, the near-term future seems bright for Malaysia Airports Holdings Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? AIRPORT’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe AIRPORT should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 AIRPORT for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for AIRPORT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Be aware that Malaysia Airports Holdings Berhad is showing 3 warning signs in our investment analysis and 1 of those is a bit unpleasant...
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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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