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While Applied Industrial Technologies, Inc. (NYSE:AIT) might not be the most widely known stock at the moment, it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Applied Industrial Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Applied Industrial Technologies
What is Applied Industrial Technologies worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.93% above my intrinsic value, which means if you buy Applied Industrial Technologies today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $94.32, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Applied Industrial Technologies’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.
What kind of growth will Applied Industrial Technologies 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 46% over the next couple of years, the future seems bright for Applied Industrial Technologies. 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? AIT’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? 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 tabs on AIT, 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 the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.