Is There Now An Opportunity In Singapore Technologies Engineering Ltd (SGX:S63)?

Singapore Technologies Engineering Ltd (SGX:S63), a aerospace & defense company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD3.55 and falling to the lows of SGD3.21. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Singapore Technologies Engineering's current trading price of SGD3.22 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Singapore Technologies Engineering’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 Singapore Technologies Engineering

Is Singapore Technologies Engineering still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15% above my intrinsic value, which means if you buy Singapore Technologies Engineering today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is SGD2.8, there’s only an insignificant downside when the price falls to its real value. Furthermore, Singapore Technologies Engineering’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What does the future of Singapore Technologies Engineering look like?

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. With profit expected to grow by a double-digit 13.39% over the next couple of years, the outlook is positive for Singapore Technologies Engineering. It looks like higher cash flows 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 Singapore Technologies Engineering’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 Singapore Technologies Engineering, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Singapore Technologies Engineering. You can find everything you need to know about Singapore Technologies Engineering in the latest infographic research report. If you are no longer interested in Singapore Technologies Engineering, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.