Guangzhou Tinci Materials Technology Co., Ltd. (SZSE:002709), might not be a large cap stock, but it saw a significant share price rise of 25% in the past couple of months on the SZSE. While good news for shareholders, the company has traded much higher in the past year. 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, could the stock still be trading at a relatively cheap price? Let's examine Guangzhou Tinci Materials Technology's valuation and outlook in more detail to determine if there's still a bargain opportunity.
What's The Opportunity In Guangzhou Tinci Materials Technology?
According to our valuation model, Guangzhou Tinci Materials Technology seems to be fairly priced at around 8.57% above our intrinsic value, which means if you buy Guangzhou Tinci Materials Technology today, you'd be paying a relatively fair price for it. And if you believe the company's true value is CN¥19.22, then there isn't really any room for the share price grow beyond what it's currently trading. So, is there another chance to buy low in the future? Given that Guangzhou Tinci Materials Technology'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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Guangzhou Tinci Materials Technology 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. 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. With profit expected to grow by 77% over the next couple of years, the future seems bright for Guangzhou Tinci Materials Technology. 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 002709'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 financial strength of the company. 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 002709, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect 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.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 2 warning signs for Guangzhou Tinci Materials Technology you should know about.
If you are no longer interested in Guangzhou Tinci Materials Technology, 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.