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華爾街日報Should You Investigate Chemtrade Logistics Income Fund (TSE:CHE.UN) At CA$14.87?
While Chemtrade Logistics Income Fund (TSE:CHE.UN) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Chemtrade Logistics Income Fund’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What Is Chemtrade Logistics Income Fund Worth?
The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Chemtrade Logistics Income Fund’s ratio of 15.45x is trading slightly below its industry peers’ ratio of 15.45x, which means if you buy Chemtrade Logistics Income Fund today, you’d be paying a decent price for it. And if you believe that Chemtrade Logistics Income Fund should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Chemtrade Logistics Income Fund’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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.
Check out our latest analysis for Chemtrade Logistics Income Fund
What kind of growth will Chemtrade Logistics Income Fund generate?
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. With profit expected to grow by 62% over the next couple of years, the future seems bright for Chemtrade Logistics Income Fund. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? CHE.UN’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at CHE.UN? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on CHE.UN, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for CHE.UN, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Chemtrade Logistics Income Fund has 3 warning signs we think you should be aware of.
If you are no longer interested in Chemtrade Logistics Income Fund, 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.