Should You Think About Buying China Overseas Grand Oceans Group Limited (HKG:81) Now?

While China Overseas Grand Oceans Group Limited (HKG:81) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SEHK, rising to highs of HK$3.97 and falling to the lows of HK$2.57. 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 China Overseas Grand Oceans Group's current trading price of HK$2.63 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 China Overseas Grand Oceans Group’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 China Overseas Grand Oceans Group

What Is China Overseas Grand Oceans Group Worth?

According to my valuation model, China Overseas Grand Oceans Group seems to be fairly priced at around 9.4% below my intrinsic value, which means if you buy China Overseas Grand Oceans Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$2.90, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because China Overseas Grand Oceans Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from China Overseas Grand Oceans 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. With profit expected to grow by 49% over the next couple of years, the future seems bright for China Overseas Grand Oceans Group. 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? It seems like the market has already priced in 81’s positive 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on 81, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 3 warning signs for China Overseas Grand Oceans Group you should be mindful of and 1 of them is a bit unpleasant.

If you are no longer interested in China Overseas Grand Oceans 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.