Should You Buy Hillgrove Resources Limited At This Share Price?

What happened to the HGO share price?

Hillgrove Sources Limited [ASX:HGO] has seen a strong rebound lately. With energy costs reaching a cyclical bottom, the marketplace is slowly starting to put their bets on a revival within the commodity market. That means better days for commodity suppliers such as Hillgrove.

However, the current bottom can always stay with us for a little bit lengthier. Eventually the demand and supply rebalancing of the commodity market will work by itself out, bringing a potentially slow recovery in cost.

Of course, that means higher reveal prices for commodity producers.

What should you do with HGO shares now?

How did I uncover HGO? This came onto my radar in the latest study at Port Philip Publishing. In this study, we looked at some of the most ‘underrated’ stocks in the Australian stock market universe.

Hillgrove had been perhaps the most ‘underrated’ stocks within the list. While the company is nevertheless receiving ‘buy’ ratings from experts and brokers, it has were built with a poor track record in terms of revenue growth, liquidity and totally free cash flow.

I wouldn’t normally recommend investors to touch stocks that don’t have great financial health, but Hillgrove is strictly the kind of underrated stock that can give back in months in the future.

What are some of the other underrated stocks on our list? Decmil Team [ASX:DCG] and Peet Ltd [PPC] are among our other highest rated stocks.

The most interesting relationship within our list of underrated stocks may be the semi-strong inverse relationship between P/E ratio as well as dividend yield.

A cheaper P/E several actually leads to higher results yield for our list of mostly micro-cap and small-cap stocks.

If you want to obtain the full list and the analysis, click here.

Ken Wangdong+

Emerging Market Analyst, New Frontier Investor