Jiangsu Xinquan Automotive Trim Co.,Ltd. (SHSE:603179), is not the largest company out there, but it saw a significant share price rise of 50% in the past couple of months on the SHSE. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Jiangsu Xinquan Automotive TrimLtd's outlook and valuation to see if the opportunity still exists.
Is Jiangsu Xinquan Automotive TrimLtd Still Cheap?
According to our valuation model, the stock is currently overvalued by about 27%, trading at CN¥50.05 compared to our intrinsic value of CN¥39.37. This means that the opportunity to buy Jiangsu Xinquan Automotive TrimLtd at a good price has disappeared! Furthermore, Jiangsu Xinquan Automotive TrimLtd's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range.
What kind of growth will Jiangsu Xinquan Automotive TrimLtd 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 88% over the next couple of years, the future seems bright for Jiangsu Xinquan Automotive TrimLtd. 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 well and truly priced in 603179'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 603179 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 603179 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 603179, which means it's worth diving deeper into other factors in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Jiangsu Xinquan Automotive TrimLtd.
If you are no longer interested in Jiangsu Xinquan Automotive TrimLtd, 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.
