When Should You Buy Avanti Feeds Limited (NSE:AVANTIFEED)?

Avanti Feeds Limited (NSE:AVANTIFEED), is not the largest company out there, but it saw a decent share price growth in the teens level on the NSEI over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Avanti Feeds’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Avanti Feeds

What is Avanti Feeds worth?

Avanti Feeds appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and 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 Avanti Feeds’s ratio of 30.18x is above its peer average of 21.42x, which suggests the stock is trading at a higher price compared to the Food industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Avanti Feeds’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 Avanti Feeds 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. Avanti Feeds' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? AVANTIFEED’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe AVANTIFEED 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 an eye on AVANTIFEED for a while, 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 optimistic prospect is encouraging for AVANTIFEED, which means 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 Avanti Feeds as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with Avanti Feeds, and understanding them should be part of your investment process.

If you are no longer interested in Avanti Feeds, 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.