At US$15.77, Is It Time To Put Tower Semiconductor Ltd. (NASDAQ:TSEM) On Your Watch List?

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Tower Semiconductor Ltd. (NASDAQ:TSEM), which is in the semiconductor business, and is based in Israel, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to $18.77 at one point, and dropping to the lows of $14.6. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Tower Semiconductor's current trading price of $15.77 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tower Semiconductor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Tower Semiconductor

What is Tower Semiconductor worth?

According to my valuation model, Tower Semiconductor seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Tower Semiconductor today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $18.47, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Tower Semiconductor’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 Tower Semiconductor 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 Tower Semiconductor, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? TSEM 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 beneficial 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 TSEM for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems 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 TSEM should the price fluctuate below its true value.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.