Is Now The Time To Look At Buying FGI Industries Ltd. (NASDAQ:FGI)?

While FGI Industries Ltd. (NASDAQ:FGI) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NASDAQCM over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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 FGI Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for FGI Industries

What's The Opportunity In FGI Industries?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.44% above our intrinsic value, which means if you buy FGI Industries today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $1.06, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because FGI Industries’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will FGI Industries 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. Though in the case of FGI Industries, it is expected to deliver a relatively unexciting top-line growth of 4.6% over the next year, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? FGI’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on FGI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 5 warning signs for FGI Industries (3 are a bit concerning!) and we strongly recommend you look at these before investing.

If you are no longer interested in FGI Industries, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com