At NT$49.10, Is It Time To Put Chian Hsing Forging Industrial Co., Ltd. (GTSM:4528) On Your Watch List?

While Chian Hsing Forging Industrial Co., Ltd. (GTSM:4528) might not be the most widely known stock at the moment, it led the GTSM gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, 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 Chian Hsing Forging Industrial’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Chian Hsing Forging Industrial

What's the opportunity in Chian Hsing Forging Industrial?

Good news, investors! Chian Hsing Forging Industrial is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. 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 18.01x is currently well-below the industry average of 28.03x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Chian Hsing Forging Industrial’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Chian Hsing Forging Industrial generate?

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. Chian Hsing Forging Industrial's revenue growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since 4528 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 4528 for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 4528. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Chian Hsing Forging Industrial, you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for Chian Hsing Forging Industrial you should be mindful of and 1 of them makes us a bit uncomfortable.

If you are no longer interested in Chian Hsing Forging Industrial, 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. 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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