Cavco Industries, Inc. (NASDAQ:CVCO), which is in the consumer durables business, and is based in United States, saw a decent share price growth in the teens level on the NASDAQGS over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Cavco Industries’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is Cavco Industries worth?
Cavco Industries appears to be overvalued by 44.02% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$146 on the market compared to my intrinsic value of $101.71. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Cavco Industries’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.
Can we expect growth from Cavco Industries?
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. However, with a relatively muted profit growth of 3.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Cavco Industries, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in CVCO’s future outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CVCO 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 CVCO 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 means it’s worth diving deeper into other factors 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 Cavco Industries. You can find everything you need to know about Cavco Industries in the latest infographic research report. If you are no longer interested in Cavco Industries, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at firstname.lastname@example.org.