Should You Think About Buying Saudi Kayan Petrochemical Company (TADAWUL:2350) Now?

While Saudi Kayan Petrochemical Company (TADAWUL:2350) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the SASE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Saudi Kayan Petrochemical’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Saudi Kayan Petrochemical

What is Saudi Kayan Petrochemical worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% below my intrinsic value, which means if you buy Saudi Kayan Petrochemical today, you’d be paying a reasonable price for it. And if you believe the company’s true value is SAR19.89, then there’s not much of an upside to gain from mispricing. Furthermore, Saudi Kayan Petrochemical’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Saudi Kayan Petrochemical generate?

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. With revenues expected to grow by 42% over the next couple of years, the future seems bright for Saudi Kayan Petrochemical. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 2350’s positive outlook, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on 2350, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which 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.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

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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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