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Unique Fabricating, Inc. (NYSEMKT:UFAB), which is in the auto components business, and is based in United States, saw significant share price movement during recent months on the AMEX, rising to highs of $4.5 and falling to the lows of $2.69. 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 Unique Fabricating’s current trading price of $2.92 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 Unique Fabricating’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Unique Fabricating still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.2% above my intrinsic value, which means if you buy Unique Fabricating today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $2.86, 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 Unique Fabricating’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.
What kind of growth will Unique Fabricating 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. With profit expected to grow by 39% over the next year, the near-term future seems bright for Unique Fabricating. 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? UFAB’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 an eye on UFAB, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Unique Fabricating. You can find everything you need to know about Unique Fabricating in the latest infographic research report. If you are no longer interested in Unique Fabricating, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.