Yahoo Finance How Does MYM Nutraceuticals Inc (FRA:0MY) Affect Your Portfolio Returns?
If you are looking to invest in MYM Nutraceuticals Inc’s (DB:0MY), or currently own the stock, then you need to understand its beta in order to understand how it can affect the risk of your portfolio. Every stock in the market is exposed to market risk, which arises from macroeconomic factors such as economic growth and geo-political tussles just to name a few. This is measured by its beta. Not every stock is exposed to the same level of market risk, and the market as a whole represents a beta of one. A stock with a beta greater than one is expected to exhibit higher volatility resulting from market-wide shocks compared to one with a beta below one.
View our latest analysis for MYM Nutraceuticals
An interpretation of 0MY’s beta
MYM Nutraceuticals has a beta of 7.67, which means that the percentage change in its stock value will be higher than the entire market in times of booms and busts. A high level of beta means investors face higher risk associated with potential gains and losses driven by market movements. According to this value of beta, 0MY will help diversify your portfolio, if it currently comprises of low-beta stocks. This will be beneficial for portfolio returns, in particular, when current market sentiment is positive.
Does 0MY’s size and industry impact the expected beta?
With a market cap of €92.38M, 0MY falls within the small-cap spectrum of stocks, which are found to experience higher relative risk compared to larger companies. Conversely, the company operates in the personal products industry, which has been found to have low sensitivity to market-wide shocks. Therefore, investors can expect a high beta associated with the size of 0MY, but a lower beta given the nature of the industry it operates in. It seems as though there is an inconsistency in risks from 0MY’s size and industry. There may be a more fundamental driver which can explain this inconsistency, which we will examine below.
Is 0MY’s cost structure indicative of a high beta?
An asset-heavy company tends to have a higher beta because the risk associated with running fixed assets during a downturn is highly expensive. I test 0MY’s ratio of fixed assets to total assets in order to determine how high the risk is associated with this type of constraint. Considering fixed assets account for less than a third of the company’s overall assets, 0MY seems to have a smaller dependency on fixed costs to generate revenue. Thus, we can expect 0MY to be more stable in the face of market movements, relative to its peers of similar size but with a higher portion of fixed assets on their books. However, this is the opposite to what 0MY’s actual beta value suggests, which is higher stock volatility relative to the market.
What this means for you:
You could benefit from higher returns during times of economic growth by holding onto 0MY. Its low fixed cost also means that, in terms of operating leverage, it is relatively flexible during times of economic downturns. What I have not mentioned in my article here are important company-specific fundamentals such as MYM Nutraceuticals’s financial health and performance track record. I urge you to complete your research by taking a look at the following:
Financial Health: Is 0MY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.
