Yahoo Finance Is It Time To Buy Zhengzhou Coal Mining Machinery Group Company Limited (HKG:564)?
Zhengzhou Coal Mining Machinery Group Company Limited (HKG:564), a machinery company based in China, saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$4.84 and falling to the lows of HK$4. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Zhengzhou Coal Mining Machinery Group’s current trading price of HK$4.06 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 Zhengzhou Coal Mining Machinery Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Zhengzhou Coal Mining Machinery Group
What’s the opportunity in Zhengzhou Coal Mining Machinery Group?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.31% above my intrinsic value, which means if you buy Zhengzhou Coal Mining Machinery Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is HK$3.58, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Zhengzhou Coal Mining Machinery Group’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Zhengzhou Coal Mining Machinery Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Zhengzhou Coal Mining Machinery Group’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in 564’s positive outlook, 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 confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on 564, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 Zhengzhou Coal Mining Machinery Group. You can find everything you need to know about Zhengzhou Coal Mining Machinery Group in the latest infographic research report. If you are no longer interested in Zhengzhou Coal Mining Machinery Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass 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.
