Yahoo Finance Should You Buy Oryx Petroleum Corporation Limited (TSX:OXC)?
Oryx Petroleum Corporation Limited (TSX:OXC), a energy company based in Canada, Check out our latest analysis for Oryx Petroleum
Is OXC still cheap?
According to my relative valuation model, OXC seems to be currently fairly priced. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that OXC’s ratio of 0.2x is trading slightly below its industry peers’ ratio of 1.6x, which means if you buy OXC today, you’d be paying a relatively reasonable price for it. And if you believe that OXC should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because OXC’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, OXC’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of OXC look like?
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. In OXC’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? OXC’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 OXC? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on OXC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for OXC, 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.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Oryx Petroleum. You can find everything you need to know about OXC in the latest infographic research report. If you are no longer interested in Oryx Petroleum, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
