Is Now The Time To Look At Buying Bufab AB (publ) (STO:BUFAB)?

Bufab AB (publ) (STO:BUFAB), is not the largest company out there, but it received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr455 at one point, and dropping to the lows of kr366. 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 Bufab's current trading price of kr366 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 Bufab’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Bufab

Is Bufab Still Cheap?

The stock is currently trading at kr366 on the share market, which means it is overvalued by 22% compared to our intrinsic value of SEK299.69. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Bufab’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.

What kind of growth will Bufab generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Bufab's earnings over the next few years are expected to increase by 49%, indicating a highly optimistic future ahead. This should lead to more robust 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 BUFAB’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BUFAB 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 tabs on BUFAB for some time, 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 BUFAB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 2 warning signs with Bufab, and understanding these should be part of your investment process.

If you are no longer interested in Bufab, 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.