What Makes China Display Optoelectronics Technology Holdings Limited (HKG:334) An Attractive Investment?

Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on China Display Optoelectronics Technology Holdings Limited (HKG:334) due to its excellent fundamentals in more than one area. 334 has a a great track record of performance and a buoyant growth outlook not yet priced into the stock. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on China Display Optoelectronics Technology Holdings here.

Undervalued with reasonable growth potential

334 is expected to churn out cash in the short term, with its operating cash flow predicted to expand at a triple-digit growth rate. This underlies the notable 24.10% return on equity over the next few years leading up to 2021. Over the past year, 334 has grown its earnings by 27.03%, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, 334 also outperformed its industry, which delivered a growth of 19.15%. This is what investors like to see!

334's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if 334's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the tech industry, 334 is also trading below its peers, relative to earnings generated. This further reaffirms that 334 is potentially undervalued.

Next Steps:

For China Display Optoelectronics Technology Holdings, I've compiled three fundamental factors you should further research:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Dividend Income vs Capital Gains: Does 334 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 334 as an investment.
3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 334? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.