Yahoo Finance At HK$020.55, Is It Time To Buy MGM China Holdings Limited (HKG:2282)?
MGM China Holdings Limited (HKG:2282), a hospitality company based in Macau, saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$23.3 and falling to the lows of HK$20. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether MGM China Holdings’s current trading price of HK$20.55 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MGM China Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View out our latest analysis for MGM China Holdings
What’s the opportunity in MGM China Holdings?
According to my valuation model, the stock is currently overvalued by about 48.33%, trading at HK$20.55 compared to my intrinsic value of HK$13.85. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since MGM China Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
Can we expect growth from MGM China Holdings?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to more than double over the next couple of years, the future seems bright for MGM China Holdings. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in 2282’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 2282 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on 2282 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 2282, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MGM China Holdings. You can find everything you need to know about MGM China Holdings in the latest infographic research report. If you are no longer interested in MGM China Holdings, 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.
