The WiseTech Global Ltd (ASX: WTC) share price has doubled since March.
That’s right, in just two short months, WiseTech shares have returned 100% to any investors who picked up shares on 19 March. That was the day that WiseTech hit $9.97 a share – its lowest share price since April 2018. Today, WiseTech shares are going for $20.91. Eat your heart out!
Of course, it hasn’t always been ‘onwards and upwards’ for this preeminent WAAAX share. WiseTech actually had a pretty horrid year in 2019. After hitting an all-time high of $38.80 in September, WiseTech took blows to seemingly never-ending problems, which included a scathing short-seller attack. As of the March lows, WiseTech shares were down almost 70% from its highs.
Why have WiseTech shares rallied?
Initially, WiseTech shares were caught up in the global market sell-off we saw in March that was sparked by the coronavirus pandemic. Since the company provides logistics solutions to global freight companies, it was likely that the market was pricing in a long deep-freeze for global trade and the logistics space, which explains why WiseTech shares plumbed to such low depths in March.
But since it has become apparent that the wheels of global trade and logistics won’t be seizing up, bullish sentiment has returned to this former high-flyer. Several ASX fund managers have also publicly taken bets on WiseTech in recent weeks, which always adds to bargain buying.
Are WiseTech shares in the buy zone today?
WiseTech shares are certainly looking a lot more attractive than they were at the high points of last year. Even so, at the time of writing, this company was still trading on an earnings multiple of 72.66 on current prices (which is a metric that doesn’t even include the impacts of the coronavirus shutdowns yet). WiseTech has employed an aggressive acquisitions strategy in recent years, which can distort this multiple somewhat, but it’s still not at a level I would call cheap.
WiseTech is a great company with an interesting growth trajectory. If you truly understand this company and remain bullish in its long-term future, then perhaps there is value to be found in the WiseTech share price today.
But from my perspective, it’s not at a level that I find enticing. There are a lot of uncertainties still floating around the logistics space, especially beyond Australia’s borders. Thus, I don’t think this company deserves such a high valuation in the current market.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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