Today we’re going to take a look at the well-established NVIDIA Corporation (NASDAQ:NVDA). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-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? Today we will analyse the most recent data on NVIDIA’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for NVIDIA
What Is NVIDIA Worth?
The stock is currently trading at US$117 on the share market, which means it is overvalued by 22% compared to our intrinsic value of $95.42. This means that the opportunity to buy NVIDIA at a good price has disappeared! But, is there another opportunity to buy low in the future? Since NVIDIA’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 NVIDIA generate?
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. With profit expected to more than double over the next couple of years, the future seems bright for NVIDIA. 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? It seems like the market has well and truly priced in NVDA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe NVDA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on NVDA for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for NVDA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into NVIDIA, you’d also look into what risks it is currently facing. Every company has risks, and we’ve spotted 2 warning signs for NVIDIA (of which 1 makes us a bit uncomfortable!) you should know about.
If you are no longer interested in NVIDIA, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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