AAC Technologies Holdings Inc. (HKG:2018), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the SEHK over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, what if the stock is still a bargain? Let's take a look at AAC Technologies Holdings's outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for AAC Technologies Holdings
Is AAC Technologies Holdings Still Cheap?
The stock is currently trading at HK$17.52 on the share market, which means it is overvalued by 31% compared to my intrinsic value of HK$13.38. This means that the opportunity to buy AAC Technologies Holdings at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that AAC Technologies Holdings's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of AAC Technologies Holdings look like?
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. AAC Technologies Holdings' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in 2018's positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 2018 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on 2018 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the positive outlook is encouraging for 2018, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about AAC Technologies Holdings as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for AAC Technologies Holdings and you'll want to know about this.
If you are no longer interested in AAC Technologies Holdings, 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.