Conclusion and Recommendation
The Lab has presented strong growth and return on shareholders’ equity over the last three years. While many companies posted a decline in profitability during 2020, the company thrived by quickly adapting to the new normal and providing clients with digital solutions. We believe the pandemic has created an increased need for the services provided by the company as the benefits of digitization have been brought to the forefront. This presents an opportunity for the company to continue its double-digit growth in 2021 by delivering bespoke services to clients while expanding its business by taking advantage of the new digitization trend catalyzed by the pandemic. We believe that given the company’s growth potential, at its current price, The Lab is undervalued. With that said, we recommend an OVERWEIGHT for the stock.
| Stock | LAB |
| Close Price | J$2.74 |
| Estimated Fair Value | J$3.81 |
| Potential Upside | 39.05% |
| Dividend Yield | 2.70% |
| Total Return | 41.75% |
| Year to Date Return | -10.46% |
| Trailing P/E | 17.85x |
| Forward P/E | 14.42x |
| Recommendation | OVERWEIGHT |
As at May 6, 2021
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