Balchem Corporation (NASDAQ:BCPC), a chemicals company based in United States, received a lot of attention from a substantial price increase on the NasdaqGS over the last few months. As a US$3.18b market-cap stock, it seems odd Balchem is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Balchem’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Balchem
What is Balchem worth?
The stock is currently trading at US$98.94 on the share market, which means it is overvalued by 75.38% compared to my intrinsic value of $56.41. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Balchem’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Balchem look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Though in the case of Balchem, it is expected to deliver a negative earnings growth of -7.87%, 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? If you believe BCPC 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. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. 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 an eye on BCPC for a while, now may not be the best time to enter into the stock. Price climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Balchem. You can find everything you need to know about Balchem in the latest infographic research report. If you are no longer interested in Balchem, 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.