Why Covenant Logistics Group, Inc. (NASDAQ:CVLG) Could Be Worth Watching

While Covenant Logistics Group, Inc. (NASDAQ:CVLG) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Covenant Logistics Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Covenant Logistics Group

Is Covenant Logistics Group still cheap?

Good news, investors! Covenant Logistics Group is still a bargain right now. According to my valuation, the intrinsic value for the stock is $38.62, but it is currently trading at US$29.27 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Covenant Logistics Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Covenant Logistics Group generate?

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. However, with a negative profit growth of -5.4% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Covenant Logistics Group. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although CVLG is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CVLG, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on CVLG for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 1 warning sign for Covenant Logistics Group and you'll want to know about it.

If you are no longer interested in Covenant Logistics Group, 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.