While Eneraqua Technologies plc (LON:ETP) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the AIM over the last few months. 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 take a look at Eneraqua Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Eneraqua Technologies

What's The Opportunity In Eneraqua Technologies?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy Eneraqua Technologies today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ￡0.82, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Eneraqua Technologies has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Eneraqua Technologies?

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 58% over the next couple of years, the future seems bright for Eneraqua Technologies. 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? It seems like the market has already priced in ETP’s positive 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 tabs on ETP, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.