Stock Analysis

At NT$456, Is It Time To Put Advanced Ceramic X Corporation (GTSM:3152) On Your Watch List?

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TPEX:3152
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Advanced Ceramic X Corporation (GTSM:3152), is not the largest company out there, but it received a lot of attention from a substantial price increase on the GTSM over the last few months. 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? Let’s take a look at Advanced Ceramic X’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Advanced Ceramic X

What's the opportunity in Advanced Ceramic X?

Advanced Ceramic X is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Advanced Ceramic X’s ratio of 42.7x is above its peer average of 20.95x, which suggests the stock is trading at a higher price compared to the Communications industry. But, is there another opportunity to buy low in the future? Given that Advanced Ceramic X’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.

Can we expect growth from Advanced Ceramic X?

earnings-and-revenue-growth
GTSM:3152 Earnings and Revenue Growth January 31st 2021

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. In Advanced Ceramic X's case, its revenues are expected to grow by 33% over the next year, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? 3152’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 3152 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio 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 an eye on 3152 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 3152, which means it’s worth diving deeper into other factors 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 Advanced Ceramic X at this point in time. Case in point: We've spotted 2 warning signs for Advanced Ceramic X you should be aware of.

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About TPEX:3152

Advanced Ceramic X

Advanced Ceramic X Corporation designs, manufactures, and sells RF front-end devices and modules for wireless communication applications in Taiwan, China, the United States, Hong Kong, and internationally.

Flawless balance sheet second-rate dividend payer.

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