Yahoo Finance Why Aveo Group (ASX:AOG) Could Be A Buy
Aveo Group (ASX:AOG), a real estate company based in Australia, saw its share price hover around a small range of A$2.49 to A$2.72 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Aveo Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Aveo Group
What is Aveo Group worth?
Great news for investors – Aveo Group is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Aveo Group’s ratio of 5.1x is below its peer average of 12.27x, which suggests the stock is undervalued compared to the Real Estate industry. Although, there may be another chance to buy again in the future. This is because Aveo Group’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 does the future of Aveo Group look like?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Aveo Group, at least in the near future.
What this means for you:
Are you a shareholder? Although AOG is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to AOG, 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 tabs on AOG for some time, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Aveo Group. You can find everything you need to know about Aveo Group in the latest infographic research report. If you are no longer interested in Aveo Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
