When Should You Buy Borgestad ASA (OB:BOR)?

While Borgestad ASA (OB:BOR) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the OB over the last few months, increasing to kr9.90 at one point, and dropping to the lows of kr2.34. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Borgestad's current trading price of kr2.43 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 Borgestad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Borgestad

What's the opportunity in Borgestad?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10.48% above my intrinsic value, which means if you buy Borgestad today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth NOK2.20, 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 Borgestad’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.

Can we expect growth from Borgestad?

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 100% over the next year, the near-term future seems bright for Borgestad. 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? It seems like the market has already priced in BOR’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on BOR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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. For example, Borgestad has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in Borgestad, 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.