REX American Resources Corporation (NYSE:REX), an energy company based in United States, received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $95.23 at one point, and dropping to the lows of $84.65. 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 REX’s current trading price of $86.16 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at REX’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for REX American Resources
What is REX worth?
REX appears to be overvalued by 63% at the moment, based on my discounted cash flow valuation. The stock is currently priced at $86.16 on the market compared to my intrinsic value of $52.71. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that REX’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 kind of growth will REX 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 a relatively muted profit growth of 8.22% expected over the next year, growth doesn’t seem like a key driver for a buy decision for REX, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in REX’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe REX 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 REX 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 REX, 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 REX American Resources. You can find everything you need to know about REX in the latest infographic research report. If you are no longer interested in REX American Resources, 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.