When Should You Buy CTT Systems AB (STO:CTT)?

CTT Systems AB (STO:CTT), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr166 at one point, and dropping to the lows of kr137. 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 CTT Systems' current trading price of kr149 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 CTT Systems’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 CTT Systems

What is CTT Systems worth?

According to my valuation model, CTT Systems seems to be fairly priced at around 10.40% above my intrinsic value, which means if you buy CTT Systems today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth SEK134.60, 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 CTT Systems’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 CTT Systems?

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 more than double over the next couple of years, the future seems bright for CTT Systems. 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 CTT’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CTT, 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.

If you'd like to know more about CTT Systems as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for CTT Systems you should be mindful of and 1 of these is potentially serious.

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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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