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When Should You Buy Marlowe plc (LON:MRL)?

·3 min read

While Marlowe plc (LON:MRL) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the AIM, rising to highs of UK£9.60 and falling to the lows of UK£7.40. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Marlowe's current trading price of UK£8.06 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Marlowe’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Marlowe

What's the opportunity in Marlowe?

According to my valuation model, Marlowe seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Marlowe today, you’d be paying a fair price for it. And if you believe that the stock is really worth £9.24, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Marlowe’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 Marlowe look like?

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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. With profit expected to more than double over the next couple of years, the future seems bright for Marlowe. 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? MRL’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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on MRL, now may not be the most optimal 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.

If you want to dive deeper into Marlowe, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Marlowe you should be aware of.

If you are no longer interested in Marlowe, 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.

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