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City Chic Collective Limited (ASX:CCX), might not be a large cap stock, but it led the ASX gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at City Chic Collective’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is City Chic Collective still cheap?
According to my valuation model, City Chic Collective seems to be fairly priced at around 8.27% above my intrinsic value, which means if you buy City Chic Collective today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$3.74, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, City Chic Collective’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from City Chic Collective?
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. With profit expected to more than double over the next couple of years, the future seems bright for City Chic Collective. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? CCX’s optimistic future growth appears to have been factored into the current share price, 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 an eye on CCX, 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.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that City Chic Collective has 3 warning signs and it would be unwise to ignore these.
If you are no longer interested in City Chic Collective, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. 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.
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