As an investor, I look for investments which do not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Daqo New Energy Corp. (NYSE:DQ), it is a company with a excellent growth outlook, which has not yet been factored into the price. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Daqo New Energy here.
High growth potential and good value
DQ is an attractive stock for growth-seeking investors, with an expected earnings growth of 68% in the upcoming year. This growth in the bottom-line is bolstered by an equally impressive top-line expansion over the same period, which is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. DQ is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of DQ's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the semiconductor industry, DQ is also trading below its peers of similar sizes in terms of their assets. This further reaffirms that DQ is potentially undervalued.
For Daqo New Energy, there are three fundamental aspects you should look at:
- Historical Performance: What has DQ's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DQ? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.