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Should You Investigate The Alumasc Group plc (LON:ALU) At UK£2.40?

While The Alumasc Group plc (LON:ALU) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the AIM over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Alumasc Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Alumasc Group

What's the opportunity in Alumasc Group?

Great news for investors – Alumasc Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is £3.22, but it is currently trading at UK£2.40 on the share market, meaning that there is still an opportunity to buy now. However, given that Alumasc Group’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 Alumasc Group look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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 a double-digit 12% over the next couple of years, the outlook is positive for Alumasc Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since ALU is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

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Are you a potential investor? If you’ve been keeping an eye on ALU for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ALU. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you'd like to know more about Alumasc Group as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Alumasc Group and you'll want to know about this.

If you are no longer interested in Alumasc Group, 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. 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.

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