Syrah Resources Limited (ASX:SYR), a materials company based in Australia, saw a significant share price rise of over 20% in the past couple of months on the ASX. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on SYR’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Syrah Resources

What is SYR worth?

According to my valuation model, SYR seems to be fairly priced at around 19% below my intrinsic value, which means if you buy SYR today, you’d be paying a reasonable price for it. And if you believe that SYR is really worth $4.51, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that SYR’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of SYR look like?

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.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. In SYR’s case, its revenues over the next couple of years are expected to double, indicating an incredibly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in SYR’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at SYR? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on SYR, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for SYR, 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.