I recently came across a fast growing stock with good valuations and lots of recent catalysts that should drive significant upside in its stock price. The stock is Dycom Industries (DY)
Key Recent Events
- The company crushed earnings estimates on its quarterly earnings report in early March.
- The company announced a $40mm stock repurchase program in mid-March.
- Stifel Nicolaus initiated coverage on the stock on Friday with a "Buy" rating with a $30 price target.
Dycom Industries - "Dycom Industries, Inc. provides specialty contracting services in the United States and Canada. It offers engineering services, including the design of service area concept boxes, terminals, buried and aerial drops, transmission and central office equipment, administration of feeder and distribution cable pairs, and fiber cable routing and design for telephone companies; and make-ready studies, strand mapping, field walk-out, computer-aided radio frequency design and drafting, and fiber cable routing and design for cable television multiple system operators". (Business Description from Yahoo Finance)
4 reasons Dycom has more upside from $22 a share:
- The stock has blasted through earnings estimates each of the last four quarters. The average beat over consensus during that time span has been north of 40%.
- Earnings are accelerating. The company made 61 cents in FY2011 and analysts have it making $1.09 in FY2012 and $1.39 in FY2013.
- Consensus estimates for FY2012 and FY2013 have risen over the past two months. The stock has a forward PE of around 16.5, which is a 30% discount to its historical average.
- The median analysts' price target on DY by the five analysts that cover the stock is $30, the same as Stifel Nicolaus' new rating and price target.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DY over the next 72 hours.