Cogent Communications Holdings Inc (NASDAQ:CCOI), a telecom company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $47.2 and falling to the lows of $41.7. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Cogent Communications Holdings’s current trading price of $44.95 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cogent Communications Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Cogent Communications Holdings
What’s the opportunity in Cogent Communications Holdings?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.16% below my intrinsic value, which means if you buy Cogent Communications Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $45.94, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like Cogent Communications Holdings’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Cogent Communications Holdings?
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. Cogent Communications Holdings’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in CCOI’s positive outlook, 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 the stock? 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 CCOI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining 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 Cogent Communications Holdings. You can find everything you need to know about Cogent Communications Holdings in the latest infographic research report. If you are no longer interested in Cogent Communications Holdings, 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.