Why Cleanaway Waste Management Limited (ASX:CWY) Could Be Worth Watching

Cleanaway Waste Management Limited (ASX:CWY), might not be a large cap stock, but it saw a decent share price growth in the teens level on the ASX over the last few months. 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.

See 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 14.44% above my intrinsic value, which means if you buy Cleanaway Waste Management today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$2.05, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Cleanaway Waste Management’s low beta implies that the stock is less volatile than the wider market.

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 increase by 82%, indicating a highly optimistic future ahead. This should lead to more robust 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 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 advantageous 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.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

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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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