Stock Under Rs 100: In Momentum, Shows Good Upside
Investing.com | Author Aayush Khanna
Published Apr 26, 2024 00:02
While screening for high-momentum stocks, one counter that came on the radar is Chaman Metallics Limited. It is a lesser-known company that manufactures and sells sponge iron in India and has a market capitalization of INR 226 crore. One good thing here is, that promotors hold a 73.6% stake in the company, very close to the maximum limit of 75%, and more importantly all of it is unpledged.
Because it is not a well-known company, we need to go through ProTips to dig useful information. It says - the stock is trading at low earnings multiple, profitable over the last 12 months, and liquid assets exceed short-term obligations, all of which are quite positive. However, on the flip side, the company is also quickly burning cash.
To gauge the momentum, price history comes in handy. In this case, the stock is up 11% in the last one week and ProTips also says strong return over the last month.
Now coming to the financial health score, here the rating of 3 out of 5 further builds up confidence and eliminates the worries regarding junk stock which is quite common in the small-cap space.
The most important thing here is the current valuation. If the stock is in strong momentum but is overvalued as well, there is a high risk in going long on that counter. Therefore we need to make sure that there is still some room left before the stock becomes fairly valued.
In this case, after analyzing the stock from 12 different financial models, the fair value comes at INR 103.9 per share, depicting a 13% upside potential from the CMP of INR 92.
Because it is such a small company, investors need to be very cautious regarding the liquidity of the counter. A high impact cost (difference between the bid and the ask) can significantly eat into profits.
Unlock the power of InvestingPro! Analyze stocks, gauge financial health, calculate the true intrinsic value with ease, and do much more. Now at a limited-time discount of 69% – just INR 216/month! Aayush Khanna
Get The App
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.