Is It Time To Consider Buying Cleanaway Waste Management Limited (ASX:CWY)?

Cleanaway Waste Management Limited (ASX:CWY), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the ASX. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Cleanaway Waste Management’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Cleanaway Waste Management

What is Cleanaway Waste Management worth?

According to my valuation model, Cleanaway Waste Management seems to be fairly priced at around 4.87% above my intrinsic value, which means if you buy Cleanaway Waste Management today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth A$2.50, there’s only an insignificant downside when the price falls to its real value. In addition to this, Cleanaway Waste Management has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Cleanaway Waste Management?

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 grow by 56% over the next couple of years, the future seems bright for Cleanaway Waste Management. 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? CWY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on CWY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Cleanaway Waste Management you should know about.

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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. 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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