Is Now An Opportune Moment To Examine Tabuk Cement Company (TADAWUL:3090)?

Tabuk Cement Company (TADAWUL:3090), 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 SASE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Tabuk Cement’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Tabuk Cement

What is Tabuk Cement worth?

According to my valuation model, the stock is currently overvalued by about 35%, trading at ر.س20.40 compared to my intrinsic value of SAR15.12. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Tabuk Cement’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 kind of growth will Tabuk Cement generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Tabuk Cement's earnings over the next few years are expected to increase by 34%, 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 3090’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 3090 should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 tabs on 3090 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for 3090, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Tabuk Cement from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view 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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