Is it time to consider buying Filta Group Holdings plc (LON:FLTA)?

While Filta Group Holdings plc (LON:FLTA) may not be the most well-known stock at the moment, it has led the AIM gainers with a relatively large price rise over the last two weeks. As a small-cap stock, barely covered by analysts, there is generally more scope for mispricing as there is less activity to push the stock closer to its fair value. Is there still a buying opportunity here? Today, I will analyse the most recent data on Filta Group Holdings’ outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Filta Group Holdings

How much is Filta Group Holdings worth?

According to my valuation model, the stock is currently overvalued by around 22%, trading at £1.56 compared to my intrinsic value of £1.28. This means that the opportunity to buy Filta Group Holdings at a good price has disappeared! But is there another opportunity to buy cheap in the future? Given that Filta Group Holdings stock is quite volatile (i.e. its price movements are magnified relative to the rest of the market), this could mean that the price may fall, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator of share price volatility.

What kind of growth will Filta Group Holdings generate?

Future prospects are an important aspect when considering a stock, especially if you are an investor looking for growth in your portfolio. While value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. In the case of Filta Group Holdings, its revenue over the next few years is expected to grow by 58%, which indicates a very optimistic future. While expenses do not grow at the same rate, or even more, this revenue growth should lead to higher cash flows, fueling a higher stock value.

What this means for you:

Are you a shareholder? FLTA’s optimistic growth appears to have been factored into its current share price, with shares trading above their fair value. At this current price, shareholders may be asking themselves a different question: Should I sell? If you think FLTA should be trading below its current price, selling high and buying back when its price returns to its true value may be profitable. But before making that decision, check whether its fundamentals have changed.

Are you a potential investor? If you’ve been watching FLTA for a while, now might not be the best time to get in on the stock. The price has exceeded its true value, meaning there’s no upside to be gained from a mispricing. However, the bullish outlook is encouraging for FLTA, meaning it’s worth looking more deeply at other factors in order to take advantage of the next price drop.

With this in mind, we would not consider investing in a stock unless we had a thorough understanding of the risks. You will be interested to know that we have found 4 Warning Signs for Filta Group Holdings and you will want to know more about it.

If you are no longer interested in Filta Group Holdings, you can use our free platform to view our list of over 50 other stocks with high growth potential.

This Simply Wall St article is general in nature. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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