Is There Now An Opportunity In Alkyl Amines Chemicals Limited (NSE:ALKYLAMINE)?

Alkyl Amines Chemicals Limited (NSE:ALKYLAMINE), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NSEI. 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 examine Alkyl Amines Chemicals’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Alkyl Amines Chemicals

What's The Opportunity In Alkyl Amines Chemicals?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 68.67x is currently well-above the industry average of 18.43x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that Alkyl Amines Chemicals’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 Alkyl Amines Chemicals look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Alkyl Amines Chemicals' earnings over the next few years are expected to increase by 90%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in ALKYLAMINE’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe ALKYLAMINE 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 ALKYLAMINE 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 ALKYLAMINE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Alkyl Amines Chemicals, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Alkyl Amines Chemicals and you'll want to know about these.

If you are no longer interested in Alkyl Amines Chemicals, 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.