When Should You Buy Skyworth Group Limited (HKG:751)?

While Skyworth Group Limited (HKG:751) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. As a small cap stock, hardly covered by any analysts, 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 take a look at Skyworth Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Skyworth Group

Is Skyworth Group still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.38% above my intrinsic value, which means if you buy Skyworth Group today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth HK$3.67, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Skyworth Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Skyworth Group?

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. However, with a relatively muted profit growth of 6.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Skyworth Group, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 751’s future outlook, 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 an eye on 751, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Skyworth Group, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for Skyworth Group and we think they deserve your attention.

If you are no longer interested in Skyworth 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.