Is Now An Opportune Moment To Examine OCI N.V. (AMS:OCI)?

While OCI N.V. (AMS:OCI) might not have the largest market cap around , it saw a significant share price rise of 35% in the past couple of months on the ENXTAM. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine OCI’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for OCI

Is OCI Still Cheap?

According to our valuation model, OCI seems to be fairly priced at around 2.2% below our intrinsic value, which means if you buy OCI today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €25.04, then there’s not much of an upside to gain from mispricing. In addition to this, OCI has a low beta, which suggests its share price is less volatile than the wider market.

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. 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 an expected decline of -5.4% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for OCI. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, OCI appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on OCI for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on OCI should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 3 warning signs for OCI (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

If you are no longer interested in OCI, 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.