When Should You Buy Mama's Creations, Inc. (NASDAQ:MAMA)?

Mama's Creations, Inc. (NASDAQ:MAMA), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQCM, rising to highs of US$4.52 and falling to the lows of US$3.21. 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 Mama's Creations' current trading price of US$3.38 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 Mama's Creations’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 Mama's Creations

What's The Opportunity In Mama's Creations?

Mama's Creations appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mama's Creations’s ratio of 20.76x is above its peer average of 17.16x, which suggests the stock is trading at a higher price compared to the Food industry. In addition to this, it seems like Mama's Creations’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 Mama's Creations 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. Mama's Creations' earnings over the next few years are expected to increase by 75%, indicating a highly optimistic future ahead. This should lead to more robust 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 MAMA’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe MAMA should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 MAMA for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for MAMA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Mama's Creations as a business, it's important to be aware of any risks it's facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Mama's Creations.

If you are no longer interested in Mama's Creations, 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.