Is It Time To Consider Buying NP3 Fastigheter AB (publ) (STO:NP3)?

While NP3 Fastigheter AB (publ) (STO:NP3) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the OM. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at NP3 Fastigheter’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for NP3 Fastigheter

Is NP3 Fastigheter still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.02% above my intrinsic value, which means if you buy NP3 Fastigheter today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is SEK268.75, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that NP3 Fastigheter’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will NP3 Fastigheter generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for NP3 Fastigheter, at least in the near future.

What this means for you:

Are you a shareholder? Currently, NP3 appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on NP3 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on NP3 should the price fluctuate below its true value.

If you'd like to know more about NP3 Fastigheter as a business, it's important to be aware of any risks it's facing. For example, we've found that NP3 Fastigheter has 5 warning signs (2 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

If you are no longer interested in NP3 Fastigheter, 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.