Is It Too Late To Consider Buying Covanta Holding Corporation (NYSE:CVA)?

By
Simply Wall St
Published
June 18, 2021
NYSE:CVA
Source: Shutterstock

Covanta Holding Corporation (NYSE:CVA), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Covanta Holding’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Covanta Holding

What is Covanta Holding worth?

Good news, investors! Covanta Holding is still a bargain right now. According to my valuation, the intrinsic value for the stock is $26.27, but it is currently trading at US$16.95 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Covanta Holding’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Covanta Holding generate?

earnings-and-revenue-growth
NYSE:CVA Earnings and Revenue Growth June 19th 2021

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. With profit expected to more than double over the next couple of years, the future seems bright for Covanta Holding. 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? Since CVA is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on CVA for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CVA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

If you want to dive deeper into Covanta Holding, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (2 can't be ignored!) that you ought to be aware of before buying any shares in Covanta Holding.

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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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