China Green Agriculture Stock Price and Value Analysis
Should you buy China Green Agriculture stock? (NYSE:CGA). Let's see how it does in our
automated value investing analysis system.
| Advantages | Disadvantages | Neutral |
|---|
- This stock is available at a great discount!
|
- This company has wild ups and downs.
- This company is less known than others.
- This company is making money at a modest rate.
|
- This company pays no dividend.
|
Inside the CGA Numbers
|
CGA Price
(China Green Agriculture stock price per share) |
$4.88 |
[?]
The intrinsic value of
a company is how much cash it can generate over its lifespan. If a business
lasts for ten years and produces a million dollars of free cash profit every
year, its intrinsic value is ten million dollars.
The present value of an
investment is the price you must pay right now to earn that intrinsic value in
however many years you want to wait. This of course depends on the rate of
return you want for your investment.
You can't predict what a company will make in the future with perfect
accuracy, but a company with a history of increasing its free cash flow every
year is likely to do so over time. By projecting free cash flow into the
future, you can calculate a fair price for the stock right now.
While most stocks are priced fairly, sometimes they go on sale. This
calculation will help you decide that. You still have to figure out if it's a
good investment, but bargains exist.
|
CGA Fair Price
(based on intrinsic value) |
$41.39
|
[?]
The safety margin of a
stock helps you avoid risk.
Why? Because the discounted free cash flow analysis relies on estimates,
discounting the fair price by a further safety margin gives you some wiggle
room to be wrong about those estimates. Established companies with stable free
cash flow growth need a small safety margin. Smaller and newer and riskier
companies need a larger safety margin. A company with a lot of debt needs a
larger safety margin and a company with a lot of equity needs less.
By investing in multiple companies and keeping a sensible safety margin, you
can be pleasantly surprised by great companies outperforming your expectations
and minimize the possibility of stagnation (or even loss) by companies which
underperform.
|
CGA Safety Price (based on a variable margin of safety) |
$24.83
|
[?]
The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its industry gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Industries are more specific than sectors, so companies within most
industries are more similar than are companies within an industry. Be aware
that the size and customers of companies are important to their prospects.
|
PE Ratio versus Sector |
92% lower than other Basic Materials stocks |
[?]
The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its sector gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Be aware that sectors are very broad, with many types of companies in the
same sector.
|
PE Ratio versus Industry |
0% lower than other Agricultural Inputs stocks |
[?]
The free cash flow
jitter of a stock measures how much the company's free cash flow varies
from its historical trend, on average. While it's always nice to make more
money than you expected, a company with predictable free cash flow is stable
and good. A company with wild swings in its free cash flow warrants further
research.
In general, the lower this number, the better.
|
Free Cash Flow Jitter |
48% |
This stock has short interest! This means that people have shorted it.
Why does that matter? They've made a bet that price will decrease from where
they bought it. Maybe there are financial problems, or maybe there's a value
play.
As of the latest analysis, there are 108,437 shares shorted. With 9,329,989 shares available for purchase and an average trading
volume over the past 10 trading days of 1,390, it would take at least 78.012 days for all of the short holders to cover their
shorts.
What does this mean to you? At this volume, it'll take more than two trading
weeks for shorts to cover. This may indicate a short squeeze play would work!
If this stock has good fundamentals and it'll take a while for the short
holders to cover, buying now could net you bigger short-term technical gains if
and as the price rises.
Is China Green Agriculture Stock on Sale?
We believe that China Green Agriculture may be worth examining further. It's
making money, which is a very positive sign. Is it on sale?
Even better, China Green Agriculture looks like a stock on sale. Based on our
analysis—if the company keeps making money the way it has been—you
may be looking at a bargain. Keep this stock in mind as you put together your
portfolio! See Before You Buy for
your next steps (and read our disclaimer about
investing risk).
Should You Buy CGA Stock?
Does China Green Agriculture have a coherent story? Does it have a plan to
continue to make money? Is it worth your time? Only you can decide where to go
from here. Our investment guide helps you ask the
right questions, including how to buy
stocks. Use these research links for more information.