What Is Chemtrade Logistics Income Fund's (TSE:CHE.UN) Share Price Doing?
While Chemtrade Logistics Income Fund (TSE:CHE.UN) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the TSX over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Chemtrade Logistics Income Fund’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Chemtrade Logistics Income Fund
What Is Chemtrade Logistics Income Fund Worth?
Great news for investors – Chemtrade Logistics Income Fund is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Chemtrade Logistics Income Fund’s ratio of 4.48x is below its peer average of 13.51x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What’s more interesting is that, Chemtrade Logistics Income Fund’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Chemtrade Logistics Income Fund 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Chemtrade Logistics Income Fund, at least in the near future.
What This Means For You
Are you a shareholder? Although CHE.UN is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CHE.UN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CHE.UN for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To that end, you should learn about the 2 warning signs we've spotted with Chemtrade Logistics Income Fund (including 1 which is a bit concerning).
If you are no longer interested in Chemtrade Logistics Income Fund, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
