Is There Now An Opportunity In Origin Materials, Inc. (NASDAQ:ORGN)?

While Origin Materials, Inc. (NASDAQ:ORGN) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQCM. While good news for shareholders, the company has traded much higher in the past year. 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 we will analyse the most recent data on Origin Materials’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Origin Materials

What's The Opportunity In Origin Materials?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 10.63% above our intrinsic value, which means if you buy Origin Materials today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $0.49, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Origin Materials’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Origin Materials?

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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Origin Materials, at least in the near future.

What This Means For You

Are you a shareholder? Currently, ORGN appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ORGN for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on ORGN should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Be aware that Origin Materials is showing 4 warning signs in our investment analysis and 2 of those shouldn't be ignored...

If you are no longer interested in Origin Materials, 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.