Is It Time To Consider Buying Generic Sweden AB (STO:GENI)?

Generic Sweden AB (STO:GENI), is not the largest company out there, but it received a lot of attention from a substantial price increase on the OM over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Generic Sweden’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Generic Sweden

Is Generic Sweden still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.32% above my intrinsic value, which means if you buy Generic Sweden today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is SEK57.63, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Generic Sweden’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Generic Sweden 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. With profit expected to grow by 44% over the next couple of years, the future seems bright for Generic Sweden. 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 GENI’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on GENI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining 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 Generic Sweden as a business, it's important to be aware of any risks it's facing. For example - Generic Sweden has 3 warning signs we think you should be aware of.

If you are no longer interested in Generic Sweden, 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.