Yahoo Finance Is Now The Time To Look At Buying Safestay plc (LON:SSTY)?
Safestay plc (LON:SSTY), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the AIM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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 Safestay’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Safestay
What's The Opportunity In Safestay?
According to our valuation model, Safestay seems to be fairly priced at around 17% below our intrinsic value, which means if you buy Safestay today, you’d be paying a fair price for it. And if you believe that the stock is really worth £0.28, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Safestay’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Safestay generate?
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. 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. However, with a relatively muted revenue growth of 5.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Safestay, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in SSTY’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on SSTY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 3 warning signs for Safestay you should be mindful of and 1 of these shouldn't be ignored.
If you are no longer interested in Safestay, 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.
