What Is Shandong Hi-Speed New Energy Group Limited's (HKG:1250) Share Price Doing?

Shandong Hi-Speed New Energy Group Limited (HKG:1250), is not the largest company out there, but it received a lot of attention from a substantial price increase on the SEHK over the last few months. While good news for shareholders, the company has traded much higher in the past year. Less-covered, small caps tend to present 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 take a look at Shandong Hi-Speed New Energy Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

What's The Opportunity In Shandong Hi-Speed New Energy Group?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Shandong Hi-Speed New Energy Group’s ratio of 14.7x is above its peer average of 10.01x, which suggests the stock is trading at a higher price compared to the Renewable Energy industry. But, is there another opportunity to buy low in the future? Given that Shandong Hi-Speed New Energy 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.

Check out our latest analysis for Shandong Hi-Speed New Energy Group

What does the future of Shandong Hi-Speed New Energy Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 1.9% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Shandong Hi-Speed New Energy Group, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in 1250’s outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 1250 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 1250 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Shandong Hi-Speed New Energy Group as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Shandong Hi-Speed New Energy Group and you'll want to know about this.

If you are no longer interested in Shandong Hi-Speed New Energy Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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

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.