At CN¥16.04, Is Shanghai Titan Scientific Co., Ltd. (SHSE:688133) Worth Looking At Closely?

While Shanghai Titan Scientific Co., Ltd. (SHSE:688133) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the SHSE over the last few months, increasing to CN¥25.00 at one point, and dropping to the lows of CN¥16.04. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Shanghai Titan Scientific's current trading price of CN¥16.04 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Shanghai Titan Scientific’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Shanghai Titan Scientific

What's The Opportunity In Shanghai Titan Scientific?

Shanghai Titan Scientific 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. 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 Shanghai Titan Scientific’s ratio of 52.99x is above its peer average of 29.25x, which suggests the stock is trading at a higher price compared to the Chemicals industry. But, is there another opportunity to buy low in the future? Given that Shanghai Titan Scientific’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Shanghai Titan Scientific generate?

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. Shanghai Titan Scientific's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 688133’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 688133 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 tabs on 688133 for some time, 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 688133, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Shanghai Titan Scientific, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Shanghai Titan Scientific you should be mindful of and 1 of these makes us a bit uncomfortable.

If you are no longer interested in Shanghai Titan Scientific, 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.

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