Whiting Petroleum Corporation (NYSE:WLL), an energy company based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Whiting Petroleum’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Whiting Petroleum
Is Whiting Petroleum still cheap?According to my valuation model, the stock is currently overvalued by about 63%, trading at US$32.74 compared to my intrinsic value of $20.15. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Whiting Petroleum’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Whiting Petroleum?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. In Whiting Petroleum’s case, its revenues over the next few years are expected to grow by 55.22%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in WLL’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 WLL 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 WLL 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 WLL, 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 Whiting Petroleum. You can find everything you need to know about Whiting Petroleum in the latest infographic research report. If you are no longer interested in Whiting Petroleum, you can use our free platform to see my list of over 50 other stocks with a high growth potential.