When Should You Buy Cleanaway Waste Management Limited (ASX:CWY)?

Cleanaway Waste Management Limited (ASX:CWY), might not be a large cap stock, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$2.79 and falling to the lows of AU$2.38. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cleanaway Waste Management's current trading price of AU$2.42 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 Cleanaway Waste Management’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Cleanaway Waste Management

Is Cleanaway Waste Management Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 1.7% below my intrinsic value, which means if you buy Cleanaway Waste Management today, you’d be paying a reasonable price for it. And if you believe the company’s true value is A$2.46, then there’s not much of an upside to gain from mispricing. What's more, Cleanaway Waste Management’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Cleanaway Waste Management generate?

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. Cleanaway Waste Management'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? 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 conviction to buy should the price fluctuates below the true 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 optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Cleanaway Waste Management, you'd also look into what risks it is currently facing. For example - Cleanaway Waste Management has 2 warning signs we think you should be aware of.

If you are no longer interested in Cleanaway Waste Management, 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.