Yahoo Finance Should You Buy Costain Group PLC (LON:COST)?
Costain Group PLC (LSE:COST), a construction company based in United Kingdom, received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to £4.87 at one point, and dropping to the lows of £4.43. 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 Costain Group’s current trading price of £4.7 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 Costain Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Costain Group
Is Costain Group still cheap?
According to my valuation model, Costain Group seems to be fairly priced at around 3.89% below my intrinsic value, which means if you buy Costain Group today, you’d be paying a fair price for it. And if you believe the company’s true value is £4.89, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like Costain Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Costain Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 30.02% over the next couple of years, the future seems bright for Costain Group. 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 already priced in COST’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on COST, now may not be the most advantageous 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 Costain Group. You can find everything you need to know about Costain Group in the latest infographic research report. If you are no longer interested in Costain Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
