Shenzhen Aisidi Co., Ltd. (SZSE:002416), might not be a large cap stock, but it saw a significant share price rise of 22% in the past couple of months on the SZSE. The company is inching closer to its yearly highs following the recent share price climb. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's take a look at Shenzhen Aisidi's outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Shenzhen Aisidi Still Cheap?
According to our valuation model, Shenzhen Aisidi seems to be fairly priced at around 3.53% above our intrinsic value, which means if you buy Shenzhen Aisidi today, you'd be paying a relatively fair price for it. And if you believe that the stock is really worth CN¥8.99, there's only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Shenzhen Aisidi's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Shenzhen Aisidi 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. With profit expected to grow by 94% over the next couple of years, the future seems bright for Shenzhen Aisidi. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in 002416's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping an eye on 002416, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Shenzhen Aisidi at this point in time. At Simply Wall St, we found 1 warning sign for Shenzhen Aisidi and we think they deserve your attention.
If you are no longer interested in Shenzhen Aisidi, 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.