In This Article:
Cargojet Inc. (TSE:CJT), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the TSX. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a 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? Let’s examine Cargojet’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Cargojet
What Is Cargojet Worth?
Cargojet appears to be overvalued by 30% at the moment, based on our discounted cash flow valuation. The stock is currently priced at CA$113 on the market compared to our intrinsic value of CA$86.75. Not the best news for investors looking to buy! In addition to this, it seems like Cargojet’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Cargojet 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. 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. Cargojet's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in CJT’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CJT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CJT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for CJT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.