Medibank Private Ltd shares are rising: Should you buy?

Shares in the newly-listed Medibank Private Ltd (ASX: MPL) are starting to gain some traction with the stock now trading at $2.18. Although that’s still below their $2.22 opening price on Tuesday, it’s certainly an improvement on the $2.08 low experienced on Wednesday which threatened to have the entire float labelled a ‘dud’.

While mum and dad shareholders are still sitting on a paper profit of 9% – given that their shares were capped at $2.00 – many had hoped to sell their stock for an immediate profit on Tuesday. While most have thus far been unable to do so, they will become able to next week which could see some volatility return to the stock in a selling frenzy.

Should you buy?

Despite the hype surrounding the stock, Medibank is by no means a good buy at today’s price. While many analysts have suggested its ‘fair price’ is somewhere around $2.10, it seems that the shares would need to be bought at a significant discount to that price to deliver great long-term returns.

Medibank Private is currently on my watchlist, but until such time that it falls to a more attractive level, I’ll buy other stocks which I believe are better positioned to deliver me market-smashing profits over the coming years.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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