Luxi Chemical Group Co., Ltd. (SZSE:000830), might not be a large cap stock, but it led the SZSE gainers with a relatively large price hike in the past couple of weeks. As a CN¥36b market-cap stock, it seems odd Luxi Chemical Group is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let's examine Luxi Chemical Group's valuation and outlook in more detail to determine if there's still a bargain opportunity.

Check out our latest analysis for Luxi Chemical Group

What's the opportunity in Luxi Chemical Group?

Great news for investors – Luxi Chemical Group is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. I find that Luxi Chemical Group's ratio of 9.07x is below its peer average of 23.86x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What's more interesting is that, Luxi Chemical Group'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 the stock moves relative to the rest of the market.

What does the future of Luxi Chemical Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Luxi Chemical Group's earnings over the next few years are expected to increase by 69%, 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? Since 000830 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic profit outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you've been keeping an eye on 000830 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 000830. 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 assessment.

If you'd like to know more about Luxi Chemical Group as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Luxi Chemical Group you should be aware of.

If you are no longer interested in Luxi Chemical Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.