AdvanSix Inc. (NYSE:ASIX), might not be a large cap stock, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let's examine AdvanSix's valuation and outlook in more detail to determine if there's still a bargain opportunity.
Check out our latest analysis for AdvanSix
What's The Opportunity In AdvanSix?
According to my valuation model, AdvanSix seems to be fairly priced at around 0.84% above my intrinsic value, which means if you buy AdvanSix today, you'd be paying a relatively reasonable price for it. And if you believe the company's true value is $29.12, then there isn't really any room for the share price grow beyond what it's currently trading. Is there another opportunity to buy low in the future? Since AdvanSix's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 AdvanSix generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Though in the case of AdvanSix, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn't help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? ASIX seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on ASIX for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there's less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven't considered today, which can help gel your views on ASIX should the price fluctuate below its true value.
If you want to dive deeper into AdvanSix, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for AdvanSix you should be mindful of and 1 of them is potentially serious.
If you are no longer interested in AdvanSix, 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.