Is It Too Late To Consider Buying Grand Baoxin Auto Group Limited (HKG:1293)?

Grand Baoxin Auto Group Limited (HKG:1293), might not be a large cap stock, but it saw a decent share price growth in the teens level on the SEHK over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Grand Baoxin Auto Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Grand Baoxin Auto Group

What's the opportunity in Grand Baoxin Auto Group?

Good news, investors! Grand Baoxin Auto Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Grand Baoxin Auto Group’s ratio of 6.11x is below its peer average of 13.27x, which indicates the stock is trading at a lower price compared to the Specialty Retail industry. However, given that Grand Baoxin Auto Group’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 Grand Baoxin Auto Group 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. With profit expected to grow by 63% over the next couple of years, the future seems bright for Grand Baoxin Auto 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? Since 1293 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 1293 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1293. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

If you want to dive deeper into Grand Baoxin Auto Group, you'd also look into what risks it is currently facing. For example, Grand Baoxin Auto Group has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you are no longer interested in Grand Baoxin Auto Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you decide to trade Grand Baoxin Auto Group, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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