As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of PAX Global Technology Limited (HKG:327), it is a financially-healthy company with a an optimistic future outlook, not yet factored into the price. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on PAX Global Technology here.
Excellent balance sheet and good value
327’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 327’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of HK companies with similar levels of earnings, 327’s share price is trading below the group’s average. This further reaffirms that 327 is potentially undervalued.
327 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 327 manages its cash and cost levels well, which is a key determinant of the company’s health. 327 seems to have put its debt to good use, generating operating cash levels of 36.31x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
Next Steps:
For PAX Global Technology, I’ve put together three essential aspects you should further research:
- Historical Performance: What has 327’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Income vs Capital Gains: Does 327 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from 327 as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 327? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.