LSB Industries Inc (NYSE:LXU), a chemicals company based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at LSB Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for LSB Industries
Is LSB Industries still cheap?
Great news for investors – LSB Industries is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $7.17, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that LSB Industries’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 LSB Industries generate?
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. However, with a relatively muted profit growth of 1.92% expected over the next year, growth doesn’t seem like a key driver for a buy decision for LSB Industries, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since LXU is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on LXU for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy LXU. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on LSB Industries. You can find everything you need to know about LSB Industries in the latest infographic research report. If you are no longer interested in LSB Industries, 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.