Magseis ASA (OB:MSEIS), an energy company based in Norway, saw significant share price volatility over the past couple of months on the OB, rising to the highs of NOK20.1 and falling to the lows of NOK14.75. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Magseis’s current trading price of NOK15.6 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Magseis’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Magseis
What is Magseis worth?Great news for investors – Magseis is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is NOK28.22, but it is currently trading at ØRE15.60 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Magseis’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Magseis 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 a negative profit growth of -1.56% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Magseis. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although MSEIS is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to MSEIS, 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 MSEIS 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Magseis. You can find everything you need to know about Magseis in the latest infographic research report. If you are no longer interested in Magseis, you can use our free platform to see my list of over 50 other stocks with a high growth potential.