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While Clearfield, Inc. (NASDAQ:CLFD) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NASDAQGM over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Clearfield’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Clearfield
What's the opportunity in Clearfield?
Good news, investors! Clearfield is still a bargain right now. According to my valuation, the intrinsic value for the stock is $89.25, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Clearfield’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 does the future of Clearfield look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 13% in the upcoming year, the short-term outlook is positive for Clearfield. 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 CLFD 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on CLFD for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CLFD. 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.