Is It Time To Consider Buying Chroma ATE Inc. (TWSE:2360)?

While Chroma ATE Inc. (TWSE:2360) might not have the largest market cap around , it led the TWSE gainers with a relatively large price hike in the past couple of weeks. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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? Today we will analyse the most recent data on Chroma ATE’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Chroma ATE

What's The Opportunity In Chroma ATE?

Chroma ATE appears to be overvalued by 37% at the moment, based on our discounted cash flow valuation. The stock is currently priced at NT$265 on the market compared to our intrinsic value of NT$192.49. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Chroma ATE’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, 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 does the future of Chroma ATE 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. With profit expected to grow by 56% over the next couple of years, the future seems bright for Chroma ATE. 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 well and truly priced in 2360’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 2360 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 an eye on 2360 for a while, 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 2360, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Chroma ATE as a business, it's important to be aware of any risks it's facing. For example - Chroma ATE has 1 warning sign we think you should be aware of.

If you are no longer interested in Chroma ATE, 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.