At CA$3.15, Is It Time To Put Exro Technologies Inc. (CVE:EXRO) On Your Watch List?

While Exro Technologies Inc. (CVE:EXRO) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the TSXV. 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? Let’s examine Exro Technologies’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Exro Technologies

What's the opportunity in Exro Technologies?

Good news, investors! Exro Technologies is still a bargain right now. My valuation model shows that the intrinsic value for the stock is CA$4.50, but it is currently trading at CA$3.15 on the share market, meaning that there is still an opportunity to buy now. However, given that Exro Technologies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Exro Technologies look like?

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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. Though in the case of Exro Technologies, it is expected to deliver a negative earnings growth of -11%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although EXRO is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to EXRO, 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 an eye on EXRO for a while, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 5 warning signs for Exro Technologies (3 don't sit too well with us) you should be familiar with.

If you are no longer interested in Exro Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. 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.

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