Yahoo Finance Is There Now An Opportunity In The Keg Royalties Income Fund (TSE:KEG.UN)?
The Keg Royalties Income Fund (TSX:KEG.UN), a hospitality company based in Canada, saw its share price hover around a small range of CA$17.7 to CA$18.52 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 Keg Royalties Income Fund’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 Keg Royalties Income Fund
What’s the opportunity in Keg Royalties Income Fund?
Keg Royalties Income Fund appears to be overvalued by 50% at the moment, based on my discounted cash flow valuation. The stock is currently priced at CA$17.93 on the market compared to my intrinsic value of CA$11.96. Not the best news for investors looking to buy! In addition to this, it seems like Keg Royalties Income Fund’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Keg Royalties Income Fund look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Though in the case of Keg Royalties Income Fund, it is expected to deliver a negative earnings growth of -10.06%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? If you believe KEG.UN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on KEG.UN for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Keg Royalties Income Fund. You can find everything you need to know about Keg Royalties Income Fund in the latest infographic research report. If you are no longer interested in Keg Royalties Income Fund, 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.
