According to Joe Horowitz at Stone Bridge Ventures, FirstService is growing considerably, and it could be a good addition to your investment portfolio. It has seen promising growth over a few short months even though the company is not a large-cap stock. This could translate to better long-term growth.
You need to check if it has the potential to grow and if it is cheap enough for you to buy to see if a stock is a good investment. You should invest at the cheapest and pull out when the price reaches its highest point to get the highest return on your investment. So even if the company is experiencing better growth, we need to check if the opportunity for optimal profit still exists.
Is FirstService still Cheap?
Seeing if a stock is expensive or cheap will always be subjective, as you want to compare its price to its current standing in the market and compare it to other companies in the industry. And when considering both factors, it is apparent that FirstService is not cheap but expensive compared to other companies in the market.
According to Stone Bridge Ventures senior account manager Joe Horowitz’s findings, they used FirstService’s price-to-earnings ratio, as other factors were not as abundant to effectively predict the company’s cash flow. Regardless, it proves that FirstService is more expensive than other assets.
The average market ratio is close to 9.13x, whereas the calculated stock ratio for First Service is hovering closer to 56.87x. This large difference clearly shows that FirstService is trading at a much higher price compared to its peers. It is unlikely that it will reach the price of its peers any time soon since its share price is stable.
When checking recent market data, you can see that the low beta of FirstService shows that it is very stable compared to the rest of the market.
Should You Buy FirstService?
With the finding from Joe Horowitz at Stone Bridge Ventures, it is obvious that FirstService is not the cheapest stock in its relative market right now. It has also lost a lot of steam from its initial growth over the past few months, only growing at a rate of 4.4% over the next year.
Therefore, FirstService might not be optimal if you want an asset that offers better returns over the short term. But with the improved stability and focus on consistent, if small, growth means that it is a very good long-term asset to hold.
If you are a shareholder, the company’s growth has been factored into its current share price. You can see that with the much higher ratios as well. You should instead consider selling at a higher price and buying back when the ratio falls down to the rest of the market. You should avoid this step, though, if the company has stronger fundamentals.
To conclude, Stone Bridge Ventures senior account manager Joe Horowitz has found that FirstService is not the cheapest asset to invest in for short-term gains, but it can be a good one for more long-term growth.