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Is Now The Time To Look At Buying Hollysys Automation Technologies Ltd. (NASDAQ:HOLI)?

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Simply Wall St
·3 min read
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Hollysys Automation Technologies Ltd. (NASDAQ:HOLI), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. 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 Hollysys Automation Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Hollysys Automation Technologies

Is Hollysys Automation Technologies still cheap?

According to my valuation model, Hollysys Automation Technologies seems to be fairly priced at around 17% below my intrinsic value, which means if you buy Hollysys Automation Technologies today, you’d be paying a fair price for it. And if you believe that the stock is really worth $16.78, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Hollysys Automation Technologies’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.

Can we expect growth from Hollysys Automation Technologies?

earnings-and-revenue-growth
earnings-and-revenue-growth

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 profit expected to more than double over the next couple of years, the future seems bright for Hollysys Automation Technologies. 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? HOLI’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 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 tabs on HOLI, now may not be the most advantageous 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.

If you want to dive deeper into Hollysys Automation Technologies, you'd also look into what risks it is currently facing. For example - Hollysys Automation Technologies has 3 warning signs we think you should be aware of.

If you are no longer interested in Hollysys Automation Technologies, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.