Is It Too Late To Consider Buying Tangshan Sanyou Chemical Industries Co.,Ltd (SHSE:600409)?

While Tangshan Sanyou Chemical Industries Co.,Ltd (SHSE:600409) might not have the largest market cap around , it saw a significant share price rise of 30% in the past couple of months on the SHSE. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Tangshan Sanyou Chemical IndustriesLtd’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Tangshan Sanyou Chemical IndustriesLtd

Is Tangshan Sanyou Chemical IndustriesLtd Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 13% below our intrinsic value, which means if you buy Tangshan Sanyou Chemical IndustriesLtd today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth CN¥6.77, then there’s not much of an upside to gain from mispricing. What's more, Tangshan Sanyou Chemical IndustriesLtd’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Tangshan Sanyou Chemical IndustriesLtd?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 29% over the next couple of years, the future seems bright for Tangshan Sanyou Chemical IndustriesLtd. 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? 600409’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 track record of its management team. 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 tabs on 600409, now may not be the most advantageous 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. You'd be interested to know, that we found 1 warning sign for Tangshan Sanyou Chemical IndustriesLtd and you'll want to know about this.

If you are no longer interested in Tangshan Sanyou Chemical IndustriesLtd, 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.