Will Elite Education (USA Stocks:EEIQ) latest volatility force retail investors to buy?
 | By Vlad Skutelnik | Macroaxis Story |
The proof of the pudding is in the eating, and for Elite Education Group (EEIQ), the taste of August could be sweet indeed. Despite the stock's recent volatility, several indicators suggest a strong rebound may be on the horizon. The Accumulation Distribution of 889.77 and a Daily Balance Of Power at 0.6667 indicate a bullish sentiment among investors. Furthermore, the Period Momentum Indicator at 0.08 and the Price Action Indicator at 0.07 suggest a positive price movement. Analysts have a strong buy consensus on EEIQ, with an estimated target price ranging from $9.1 to a high of $11.1, significantly above the current market valuation of $0.92. The company's valuation hype value stands at 0.84, indicating a potential undervaluation. However, investors should note that the company's real value is estimated at $3.11 as of the last filing date on January 31, 2024. With these factors in play, EEIQ, a key player in the Diversified Consumer Services sector, could be poised for a strong rebound in August. With a 90-day investment horizon, Elite Education Group is projected to yield returns 10.99 times higher than the market. However, it's also 10.99 times more volatile than its market benchmark. It trades about 0.03 of its potential returns per unit of risk, compared to the Dow Jones Industrial's 0.13 per unit of risk. While risk-averse retail investors may overanalyze the diversified consumer services sector, it's worth summarizing Elite Education Group. We'll examine whether the expected returns justify its volatility. The latest risk factors for Elite may affect the stock's value, which we currently deem undervalued. The real value is nearing $3.11 per share.
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Reviewed by Michael Smolkin
From a volatility perspective, Elite Education Group (EEIQ) exhibits a Mean Deviation of 4.27 and a Total Risk Alpha of -0.57, indicating a higher risk-adjusted performance. Despite a Maximum Drawdown of 43.63, the stock's potential upside of 9.52 suggests that it could be poised for a strong rebound in August, especially considering its recent price percent change of 9.52. However, investors should be cautious due to the stock's high volatility and potential for significant losses.
Top Findings
Elite Education Group currently has approximately $12.93 million in cash, with a positive cash flow from operations of $5.25 million. This results in a cash-per-share ratio of 1.17, making it a potentially attractive takeover target if it continues to generate positive cash flow. The company's performance score is 2 on a scale of 0 to 100. With a Beta of 2.22, the firm carries a significant risk relative to the market. It's expected to outperform the market when it rises, but underperform during negative market returns. It's advisable to check Elite Education's Treynor ratio and the relationship between the accumulation distribution and price action indicator to make an informed decision on its future price patterns.Volatility is a rate at which the price of Elite Education or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Elite Education may increase or decrease. In other words, similar to Elite's beta indicator, it measures the risk of Elite Education and helps estimate the fluctuations that may happen in a short period of time. So if prices of Elite Education fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
Watch out for price decline
Please consider monitoring Elite Education on a daily basis if you are holding a position in it. Elite Education is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Elite Education stock to be traded above the $1 level to remain listed. If Elite Education stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
How important is Elite Education's Liquidity
Elite Education financial leverage refers to using borrowed capital as a funding source to finance Elite Education Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Elite Education financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Elite Education's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Elite Education's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Elite Education's total debt and its cash.
Breaking down the case for Elite Education
The latest bullish price patterns experienced by current Elite Education Group shareholders could raise concerns from retail investors as the firm is trading at a share price of 0.92 on 7,044 in volume. The company directors and management have been very successful in rebalancing the firm assets at opportune times to take advantage of market volatility in June. The stock standard deviation of daily returns for 90 days investing horizon is currently 6.37. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Elite Education partners."As the saying goes, 'buy when there's blood in the streets.' Elite Education Group (EEIQ) has seen significant volatility recently, with a high variance of 41.68 and a maximum drawdown of 43.63. However, with a current ratio of 2.49X and cash per share at 1.17X, the company's financial health appears robust. Despite a negative Jensen Alpha of -0.38 indicating underperformance, the potential upside of 9.52 suggests that EEIQ could be poised for a strong rebound in August. Investors should keep a close eye on this stock, as the market capitalization of 10.41M and a target price of 2.3 could present a lucrative opportunity.".
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