Is Now The Time To Look At Buying OCI Company Ltd. (KRX:010060)?

OCI Company Ltd. (KRX:010060), might not be a large cap stock, but it led the KOSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at OCI’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for OCI

What is OCI worth?

According to my valuation model, OCI seems to be fairly priced at around 12% below my intrinsic value, which means if you buy OCI today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₩97537.27, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because OCI’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of OCI 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. Though in the case of OCI, it is expected to deliver a relatively unexciting top-line growth of 4.9% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? A010060’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on A010060, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing OCI at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of OCI.

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This article by Simply Wall St is general in nature. 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.
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