Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on Tongda Group Holdings Limited (HKG:698) due to its excellent fundamentals in more than one area. 698 is a notable dividend payer with a buoyant growth outlook, not yet factored into the price. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on Tongda Group Holdings here.
Undervalued with reasonable growth potential and pays a dividend
One reason why investors are attracted to 698 is its earnings growth potential in the near future of 24%, bolstered by its impressive cash-generating ability, as analysts predict its operating cash flows will rise by 57% over the same time period. This is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. 698’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts’ consensus forecast growth be correct. Also, relative to the rest of HK companies with similar levels of earnings, 698’s share price is trading below the group’s average. This further reaffirms that 698 is potentially undervalued.
698 is also a dividend company, with ample net income to cover its dividend payout, which has been consistently growing over the past decade, keeping income investors happy.
For Tongda Group Holdings, I’ve compiled three key factors you should further examine:
- Historical Performance: What has 698’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 698? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.