At US $ 36.58, is it time to put Strattec Security Corporation (NASDAQ: STRT) on your watchlist?
Strattec Security Corporation (NASDAQ: STRT), may not be a large cap stock, but it has seen a double-digit share price rise of more than 10% in the past two months on the NASDAQGM. Less covered, small caps see 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 trade at a low price relative to its true value? Let’s take a closer look at Strattec Security’s assessment and outlook to determine if there is still an opportunity to negotiate.
Check out our latest review for Strattec Security
What is Strattec Security worth?
Great news for investors – Strattec Security is still trading fairly low under my multiple pricing model, where I compare the company’s price-to-earnings ratio to the industry average. I used the price / earnings ratio in this case because there is not enough visibility to forecast its cash flow. The stock’s ratio of 9.89x is currently well below the industry average of 19.69x, meaning it is trading at a lower price than its peers. However, there may be another chance to buy again in the future. This is because Strattec Security’s beta (a measure of stock price volatility) is high, which means its price movements will be inflated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Strattec Security?
Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s take a look at the future expectations of the business as well. With expected earnings growing 22% over the next year, the near-term future looks bright for Strattec Security. It looks like a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? Given that STRT is currently trading below the industry PE ratio, this might be a great time to increase your holdings of stocks. With optimistic earnings prospects on the horizon, it seems that this growth has not yet been fully reflected in the share price. However, there are also other factors such as financial health to consider which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping tabs on STRT for a while, now might be the time to take a leap. Its promising future earnings outlook is not yet fully reflected in the current share price, which means it is not too late to buy STRT. But before making any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
So, if you want to dig deeper into this title, it is crucial to take into account the risks it faces. For example, we discovered 2 warning signs which you should browse to get a better picture of Strattec Security.
If you are no longer interested in Strattec Security, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.