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Why Beacon Lighting Group Limited (ASX:BLX) Could Be Worth Watching

While Beacon Lighting Group Limited (ASX:BLX) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the ASX. 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 Beacon Lighting Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Beacon Lighting Group

Is Beacon Lighting Group still cheap?

Good news, investors! Beacon Lighting Group is still a bargain right now. My valuation model shows that the intrinsic value for the stock is A$4.01, but it is currently trading at AU$2.91 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Beacon Lighting Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Beacon Lighting Group?

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. 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 Beacon Lighting Group, at least in the near future.

What this means for you:

Are you a shareholder? Although BLX 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 BLX, or whether diversifying into another stock may be a better move for your total risk and return.

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Are you a potential investor? If you’ve been keeping an eye on BLX for a while, but hesitant on making the leap, I recommend you dig deeper 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.

If you want to dive deeper into Beacon Lighting Group, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Beacon Lighting Group (including 1 which is concerning).

If you are no longer interested in Beacon Lighting Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.