Should You Think About Buying Sylvamo Corporation (NYSE:SLVM) Now?

Sylvamo Corporation (NYSE:SLVM), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a US$2.1b market-cap stock, it seems odd Sylvamo is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Sylvamo’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Sylvamo

What's The Opportunity In Sylvamo?

According to my valuation model, Sylvamo seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Sylvamo today, you’d be paying a fair price for it. And if you believe that the stock is really worth $58.18, then there’s not much of an upside to gain from mispricing. Furthermore, Sylvamo’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Sylvamo?

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 next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Sylvamo, at least in the near future.

What This Means For You

Are you a shareholder? SLVM seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk 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 tabs on SLVM 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. Furthermore, 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 crystalize your views on SLVM should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Sylvamo at this point in time. For example, we've found that Sylvamo has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Sylvamo, 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.