Should You Think About Buying Del Monte Pacific Limited (SGX:D03) Now?

Del Monte Pacific Limited (SGX:D03), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SGX over the last few months, increasing to S$0.34 at one point, and dropping to the lows of S$0.27. 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 Del Monte Pacific's current trading price of S$0.27 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 Del Monte Pacific’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 Del Monte Pacific

What's The Opportunity In Del Monte Pacific?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.09% above my intrinsic value, which means if you buy Del Monte Pacific today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is SGD0.26, 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 Del Monte Pacific’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 Del Monte Pacific 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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for Del Monte Pacific. 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? D03’s optimistic future growth appears to have been factored into the current share price, 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 D03, now may not be the most optimal 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Be aware that Del Monte Pacific is showing 3 warning signs in our investment analysis and 2 of those don't sit too well with us...

If you are no longer interested in Del Monte Pacific, 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.