While Lovisa Holdings Limited (ASX:LOV) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. While good news for shareholders, the company has traded much higher in the past year. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Lovisa Holdings’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Lovisa Holdings

What Is Lovisa Holdings Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 15.02% above our intrinsic value, which means if you buy Lovisa Holdings today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth A$25.47, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Lovisa Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Lovisa Holdings generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 grow by 76% over the next couple of years, the future seems bright for Lovisa Holdings. 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? LOV’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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on LOV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Lovisa Holdings, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Lovisa Holdings you should know about.

If you are no longer interested in Lovisa Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.