Cohu, Inc. (NASDAQ:COHU), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Cohu's outlook and valuation to see if the opportunity still exists.

See our latest analysis for Cohu

What's The Opportunity In Cohu?

Good news, investors! Cohu is still a bargain right now. According to my valuation, the intrinsic value for the stock is $46.28, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What's more interesting is that, Cohu's share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Cohu generate?

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -7.1% expected over the next couple of years, near-term growth certainly doesn't appear to be a driver for a buy decision for Cohu. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although COHU is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to COHU, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you've been keeping an eye on COHU for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Cohu as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Cohu (including 1 which makes us a bit uncomfortable).

If you are no longer interested in Cohu, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.