Is There Now An Opportunity In ShenZhen Woer Heat-Shrinkable Material Co.,Ltd. (SZSE:002130)?

While ShenZhen Woer Heat-Shrinkable Material Co.,Ltd. (SZSE:002130) 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. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. 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 examine ShenZhen Woer Heat-Shrinkable MaterialLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for ShenZhen Woer Heat-Shrinkable MaterialLtd

What's The Opportunity In ShenZhen Woer Heat-Shrinkable MaterialLtd?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 2.72% above our intrinsic value, which means if you buy ShenZhen Woer Heat-Shrinkable MaterialLtd today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CN¥9.74, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, ShenZhen Woer Heat-Shrinkable MaterialLtd’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will ShenZhen Woer Heat-Shrinkable MaterialLtd 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. ShenZhen Woer Heat-Shrinkable MaterialLtd's earnings over the next few years are expected to increase by 43%, 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? 002130’s optimistic future growth appears to have been factored into the current share price, 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 002130, 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.

If you want to dive deeper into ShenZhen Woer Heat-Shrinkable MaterialLtd, you'd also look into what risks it is currently facing. For example - ShenZhen Woer Heat-Shrinkable MaterialLtd has 1 warning sign we think you should be aware of.

If you are no longer interested in ShenZhen Woer Heat-Shrinkable MaterialLtd, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.