Fairmount Santrol Holdings Inc (NYSE:FMSA), an energy company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Fairmount Santrol Holdings’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Fairmount Santrol Holdings
What’s the opportunity in Fairmount Santrol Holdings?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12% above my intrinsic value, which means if you buy Fairmount Santrol Holdings today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $5.36, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Fairmount Santrol 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Fairmount Santrol 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. Fairmount Santrol Holdings’s earnings over the next few years are expected to increase by 34.31%, indicating a highly optimistic future ahead. This should lead to more robust 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 FMSA’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 track record of its management team. 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 an eye on FMSA, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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 Fairmount Santrol Holdings. You can find everything you need to know about Fairmount Santrol Holdings in the latest infographic research report. If you are no longer interested in Fairmount Santrol Holdings, 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.