Canaccord Genuity Group Inc. (TSE:CF), which is in the capital markets business, and is based in Canada, received a lot of attention from a substantial price increase on the TSX over the last few months. Less-covered, small caps sees 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 take a look at Canaccord Genuity Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Canaccord Genuity Group still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.29% above my intrinsic value, which means if you buy Canaccord Genuity Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth CA$5.40, then there isn’t really any room for the share price grow beyond what it’s currently trading. What’s more, Canaccord Genuity Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Canaccord Genuity Group?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by a double-digit 11% over the next couple of years, the outlook is positive for Canaccord Genuity Group. If the level of expenses is able to be maintained, 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? CF’s optimistic future growth appears to have been factored into the current share price, 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 tabs on CF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into 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 Canaccord Genuity Group. You can find everything you need to know about Canaccord Genuity Group in the latest infographic research report. If you are no longer interested in Canaccord Genuity Group, you can use our free platform to see my 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. Thank you for reading.
Discounted cash flow calculation for every stock
Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.