Is It Time To Consider Buying Avery Dennison Corporation (NYSE:AVY)?

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Avery Dennison Corporation (NYSE:AVY), which is in the packaging business, and is based in United States, received a lot of attention from a substantial price increase on the NYSE over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Avery Dennison’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Avery Dennison

What’s the opportunity in Avery Dennison?

Avery Dennison appears to be overvalued by 28.94% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$103 on the market compared to my intrinsic value of $79.9. This means that the opportunity to buy Avery Dennison at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Avery Dennison’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 Avery Dennison?

NYSE:AVY Future Profit February 8th 19
NYSE:AVY Future Profit February 8th 19
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 38% over the next couple of years, the future seems bright for Avery Dennison. 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? AVY’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe AVY 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 tabs on AVY for some time, 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 AVY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Avery Dennison. You can find everything you need to know about Avery Dennison in the latest infographic research report. If you are no longer interested in Avery Dennison, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.