SORL Auto Parts Inc (NASDAQ:SORL), a auto components company based in China, received a lot of attention from a substantial price increase on the NasdaqGM in the over the last few months. Less covered, small-stocks like SORL 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 SORL still be trading at a low price relative to its actual value? Let’s examine SORL’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for SORL Auto Parts
Is SORL still cheap?
Great news for investors – SORL is still trading at a fairly cheap price. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.2x is currently well-below the industry average of 15x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, SORL’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much SORL moves relative to the rest of the market.
Can we expect growth from SORL?
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 SORL future expectations. However, with a relatively muted profit growth of 6.71% expected over the next year, growth doesn’t seem like a key driver for a buy decision for SORL, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since SORL is currently undervalued, it may be a great time to accumulate more of 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 SORL for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy SORL. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on SORL Auto Parts. You can find everything you need to know about SORL in the latest infographic research report. If you are no longer interested in SORL Auto Parts, 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.