When Should You Buy Capstone Turbine Corporation (NASDAQ:CPST)?

Capstone Turbine Corporation (NASDAQ:CPST), a electrical company based in United States, saw significant share price volatility over the past couple of months on the NasdaqCM, rising to the highs of $0.9 and falling to the lows of $0.71. 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 Capstone Turbine's current trading price of $0.73 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 Capstone Turbine’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Capstone Turbine

What's the opportunity in Capstone Turbine?

According to my valuation model, the stock is currently overvalued by about 40%, trading at $0.73 compared to my intrinsic value of $0.52. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Capstone Turbine’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Capstone Turbine look like?

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 grow by 91.71% over the next couple of years, the future seems bright for Capstone Turbine. 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 well and truly priced in Capstone Turbine’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Capstone Turbine should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on Capstone Turbine for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for Capstone Turbine, which means it’s worth diving deeper into other factors 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 Capstone Turbine. You can find everything you need to know about Capstone Turbine in the latest infographic research report. If you are no longer interested in Capstone Turbine, 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.