Jason Industries Inc (NASDAQ:JASN), a machinery company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqCM. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Jason Industries’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Jason Industries
Is Jason Industries still cheap?Great news for investors – Jason Industries is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $6.23, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Jason Industries’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, 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 kind of growth will Jason Industries 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. However, with an expected decline of -3.29% in revenues over the next year, short term growth isn’t a driver for a buy decision for Jason Industries. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although JASN is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to JASN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on JASN for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Jason Industries. You can find everything you need to know about Jason Industries in the latest infographic research report. If you are no longer interested in Jason Industries, you can use our free platform to see my list of over 50 other stocks with a high growth potential.