Is It Time To Consider Buying Geely Automobile Holdings Limited (HKG:175)?

Let's talk about the popular Geely Automobile Holdings Limited (HKG:175). The company's shares saw a significant share price rise of 92% in the past couple of months on the SEHK. The company is inching closer to its yearly highs following the recent share price climb. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Geely Automobile Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Geely Automobile Holdings

Is Geely Automobile Holdings Still Cheap?

Great news for investors – Geely Automobile Holdings is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is HK$23.89, but it is currently trading at HK$14.34 on the share market, meaning that there is still an opportunity to buy now. However, given that Geely Automobile Holdings’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 does the future of Geely Automobile Holdings look like?

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. 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. However, with a negative profit growth of -6.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Geely Automobile Holdings. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although 175 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to 175, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on 175 for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. To help with this, we've discovered 2 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in Geely Automobile Holdings.

If you are no longer interested in Geely Automobile Holdings, 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.