Should You Investigate Tayho Advanced Materials Group Co., Ltd. (SZSE:002254) At CN¥10.68?

Tayho Advanced Materials Group Co., Ltd. (SZSE:002254), 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. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Tayho Advanced Materials Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Tayho Advanced Materials Group

Is Tayho Advanced Materials Group Still Cheap?

Tayho Advanced Materials Group is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 44.83x is currently well-above the industry average of 24.53x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that Tayho Advanced Materials Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of Tayho Advanced Materials Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 more than double over the next couple of years, the future seems bright for Tayho Advanced Materials Group. 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 002254’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 002254 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 002254 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 002254, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Tayho Advanced Materials Group as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Tayho Advanced Materials Group you should be mindful of and 1 of these is a bit unpleasant.

If you are no longer interested in Tayho Advanced Materials Group, 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.