Is It Time To Consider Buying Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486)?

While Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486) might not have the largest market cap around , it saw a decent share price growth of 13% on the SHSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. 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. However, what if the stock is still a bargain? Let’s take a look at Jiangsu Yangnong Chemical’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Jiangsu Yangnong Chemical

What's The Opportunity In Jiangsu Yangnong Chemical?

Jiangsu Yangnong Chemical appears to be overvalued by 23% at the moment, based on our discounted cash flow valuation. The stock is currently priced at CN¥53.12 on the market compared to our intrinsic value of CN¥43.19. Not the best news for investors looking to buy! Furthermore, Jiangsu Yangnong Chemical’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.

Can we expect growth from Jiangsu Yangnong Chemical?

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 42% over the next couple of years, the future seems bright for Jiangsu Yangnong Chemical. 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? 600486’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 600486 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 600486 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 600486, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 1 warning sign for Jiangsu Yangnong Chemical you should know about.

If you are no longer interested in Jiangsu Yangnong Chemical, 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.