BII Railway Transportation Technology Holdings Company Limited (HKG:1522), which is in the software business, and is based in China, saw a decent share price growth in the teens level on the SEHK over the last few months. 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 I will analyze the most recent data on BII Railway Transportation Technology Holdings's outlook and valuation to see if the opportunity still exists.
What's the opportunity in BII Railway Transportation Technology Holdings?
BII Railway Transportation Technology Holdings appears to be overvalued by 32.57% at the moment, based on my discounted cash flow valuation. The stock is currently priced at HK$0.64 on the market compared to my intrinsic value of HK$0.48. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that BII Railway Transportation Technology Holdings'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 of share price volatility.
Can we expect growth from BII Railway Transportation Technology Holdings?
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 revenue expected to more than double in the next few years, the future appears to be extremely bright for BII Railway Transportation Technology Holdings. If expenses can also be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
Are you a shareholder? It seems like the market has well and truly priced in 1522's positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 1522 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 1522 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 1522, 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 BII Railway Transportation Technology Holdings. You can find everything you need to know about BII Railway Transportation Technology Holdings in the latest infographic research report. If you are no longer interested in BII Railway Transportation Technology Holdings, you can use our free platform to see my list of over 50 other stocks with high growth potential.
