Yunhong CTI Ltd. (CTIB) in Lake Barrington, Ill., is one of the leading manufacturers and marketers of foil balloons and produces laminated and printed films for commercial uses. In addition, the company distributes Candy Blossoms and other gift items and markets its products throughout the United States and in several other countries.

The company’s stock has gained 11.4% in price over the past year and 9.6% over the past six months. However, CTIB is currently trading 59% below its 52-week high of $5, which it hit on February 23, 2021.

Given its competitive landscape and the upcoming holiday season, we think the company should witness a rise in demand for its party products line and an overall boost to its revenue. Furthermore, given CTIB’s robust financials, the stock could witness significant upside in the near term.

Here’s what could shape CTIB’s performance in the near term:

Strong Financials

For the second quarter, ended June 30, 2021, CTIB’s revenue increased 10.1% year-over-year to $6.33 billion. Its operating income came in at $2.86 billion, compared to a $962.08 million operating loss in the prior-year quarter. The company reported $1.78 billion in net income, compared to a $1.52 billion net loss in the second quarter of 2020. In addition, its EPS amounted to $0.12, compared to a $0.41 loss per share during the same period last year.

Discounted Valuation

In terms of its trailing-12-months Price/Cash Flow, the stock is currently trading at 6.22x, which is 44.2% lower than the 11.13x industry average. Also, its 0.46x trailing-12-months Price/Sales multiple is 63.9% lower than the 1.27x industry average. Also, CTIB’s 1.15x trailing-12-months EV/Sales  is 24.1% lower than the 1.52x industry average.

Consensus Rating and Price Target Indicate Potential Upside

The only Wall Street analysts providing a rating for the stock rated it a Buy. Closing yesterday’s trading session at $2.05, the $7 average price target represents a potential 241.4% upside.

Bottom Line

CTIB could see significant demand for its products and consistent growth in the coming months, thanks to the forthcoming holiday season. Moreover, its strong fundamentals and favorable analyst estimates should instill investors with hope regarding the stock. Thus, we think the stock could be a good bet at its current, discounted valuation.

CTIB shares were trading at $2.01 per share on Wednesday morning, down $0.04 (-1.95%). Year-to-date, CTIB has gained 16.86%, versus a 23.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

More Resources for the Stocks in this Article