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Is It The Right Time To Buy Sensata Technologies Holding NV (ST)?

Brandy Kinsey

Sensata Technologies Holding NV (NYSE:ST), a electrical equipment company based in Netherlands, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $50.3 and falling to the lows of $43.78. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether ST’s current trading price of $47.81 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ST’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for ST

What’s the opportunity in ST?

According to my valuation model, the stock is currently overvalued by about 37%, trading at $47.81 compared to my intrinsic value of $35. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that ST’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of ST look like?

NYSE:ST Future Profit Nov 21st 17
NYSE:ST Future Profit Nov 21st 17

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. ST’s earnings over the next few years are expected to increase by 48.17%, 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 well and truly priced in ST’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ST 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. 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 ST for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ST, which means it’s worth diving deeper into other factors 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 Sensata Technologies Holding N.V. You can find everything you need to know about ST in the latest infographic research report. If you are no longer interested in Sensata Technologies Holding N.V, 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.