When Should You Buy Ningbo Huaxiang Electronic Co., Ltd. (SZSE:002048)?

While Ningbo Huaxiang Electronic Co., Ltd. (SZSE:002048) might not have the largest market cap around , it led the SZSE gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. 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 Ningbo Huaxiang Electronic’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Is Ningbo Huaxiang Electronic Still Cheap?

Great news for investors – Ningbo Huaxiang Electronic is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Ningbo Huaxiang Electronic’s ratio of 14.03x is below its peer average of 33.81x, which indicates the stock is trading at a lower price compared to the Auto Components industry. What’s more interesting is that, Ningbo Huaxiang Electronic’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

View our latest analysis for Ningbo Huaxiang Electronic

What does the future of Ningbo Huaxiang Electronic 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. Ningbo Huaxiang Electronic's earnings over the next few years are expected to increase by 60%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 002048 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With a positive profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 002048 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 002048. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you want to dive deeper into Ningbo Huaxiang Electronic, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Ningbo Huaxiang Electronic and you'll want to know about these.

If you are no longer interested in Ningbo Huaxiang Electronic, 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.