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Landstar System, Inc. (NASDAQ:LSTR), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NASDAQGS 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. However, what if the stock is still a bargain? Let’s take a look at Landstar System’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for Landstar System
What is Landstar System worth?
Great news for investors – Landstar System is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $230.72, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Landstar System’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 Landstar System 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. However, with a negative profit growth of -18% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Landstar System. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although LSTR 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 LSTR, 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 an eye on LSTR for a while, but hesitant on making the leap, I recommend you dig deeper 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.
If you want to dive deeper into Landstar System, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Landstar System, and understanding this should be part of your investment process.