The affordable growth strategy targets companies that combine above-average earnings expansion with valuations that haven't yet run away from their fundamentals. It’s a balance that can be difficult to find in any market environment. The idea is to avoid the extremes—steering clear of stocks priced for perfection that have little room for error, as well as those with deep value tags that may come with structural problems. An ideal candidate shows accelerating momentum in its business while trading at a multiple that still reflects reasonable expectations. This approach can be particularly relevant when the broader market shows a neutral long-term trend, as it forces a focus on company-specific drivers rather than riding a general tide.
CoreCivic, Inc. (NYSE:CXW) operates as a government solutions company, managing prisons, detention facilities, and reentry centers across the U.S. This is a business with a tangible, contracted revenue stream, which provides a foundation for the kind of financial visibility that growth investors appreciate. The fundamental data from the ChartMill report highlights exactly why this name surfaced in the Affordable Growth screen.
Valuation and Growth: The Core of the Thesis
The most notable aspect of CoreCivic for this strategy is the combination of its growth trajectory and valuation profile. The company’s earnings per share grew by an exceptional 63.16% over the past year, with a longer-term average growth rate of 17.34%. Looking forward, analysts expect EPS to expand by 30.04% annually, and revenue is projected to grow at 10.69% per year. Importantly, these growth rates are accelerating, meaning the business is gaining momentum rather than slowing down.
Despite this strong growth, the valuation remains reasonable. The trailing P/E ratio of 25.69 is actually cheaper than 70% of its industry peers, and the forward P/E drops to 17.28, which is cheaper than over 81% of the industry. This creates a favorable setup: you are paying a forward multiple that is below the industry average for a company that is expected to grow earnings at roughly 30%. The PEG ratio reflects this, signaling a valuation that compensates for the growth rate. This is the exact profile the Affordable Growth screen is designed to capture—a stock where the market hasn't fully priced in the future earnings potential.
Profitability and Health: The Supporting Cast
Growth without a stable financial base can be risky. CoreCivic's profitability rating of 6/10 and health rating of 5/10 are not stellar, but they are adequate for the strategy’s framework. The company’s return on equity of 9.27% and return on invested capital of 6.16% both outperform the majority of its peers, indicating that the business is generating reasonable returns on the capital it employs. A profit margin of 5.53% and an operating margin of 10.84% also sit in the upper half of the industry, suggesting operational efficiency is intact.
On the health side, the most reassuring figures are in liquidity. With a current ratio of 2.44 and a quick ratio of 2.44, CoreCivic has more than enough short-term assets to cover its immediate obligations. The debt-to-equity ratio of 0.99 is manageable, though the debt-to-free-cash-flow ratio is high at 53.52, which is a point to monitor. These metrics matter because a company can have strong growth, but if its balance sheet is strained, that growth can evaporate quickly when conditions tighten. CoreCivic’s health is neutral enough to not be a red flag, which is the minimum requirement for an affordable growth candidate.
Reviewing the Full Picture
For a deeper breakdown of the specific ratios and how they compare against the company's 80 industry peers, you can review the complete fundamental analysis report for CXW. This report provides the detailed scoring across growth, valuation, health, profitability, and dividend factors.
Finding More Candidates
CoreCivic is just one example of a stock fitting the affordable growth profile. To uncover other companies with a similar combination of strong growth and reasonable valuation, you can run your own scan using the Affordable Growth screen, which filters for the exact parameters discussed here, allowing you to build a broader watchlist of candidates.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research or consult with a financial professional before making any investment decisions.
Read full article here »
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CoreCivic (NYSE:CXW) Fits the Affordable Growth Strategy with Strong Momentum and Reasonable Valuation
The affordable growth strategy targets companies that combine above-average earnings expansion with valuations that haven't yet run away from their fundamentals. It’s a balance that can be difficult to find in any market environment. The idea is to avoid the extremes—steering clear of stocks priced for perfection that have little room for error, as well as those with deep value tags that may come with structural problems. An ideal candidate shows accelerating momentum in its business while trading at a multiple that still reflects reasonable expectations. This approach can be particularly relevant when the broader market shows a neutral long-term trend, as it forces a focus on company-specific drivers rather than riding a general tide.
CoreCivic, Inc. (NYSE:CXW) operates as a government solutions company, managing prisons, detention facilities, and reentry centers across the U.S. This is a business with a tangible, contracted revenue stream, which provides a foundation for the kind of financial visibility that growth investors appreciate. The fundamental data from the ChartMill report highlights exactly why this name surfaced in the Affordable Growth screen.
Valuation and Growth: The Core of the Thesis
The most notable aspect of CoreCivic for this strategy is the combination of its growth trajectory and valuation profile. The company’s earnings per share grew by an exceptional 63.16% over the past year, with a longer-term average growth rate of 17.34%. Looking forward, analysts expect EPS to expand by 30.04% annually, and revenue is projected to grow at 10.69% per year. Importantly, these growth rates are accelerating, meaning the business is gaining momentum rather than slowing down.
Despite this strong growth, the valuation remains reasonable. The trailing P/E ratio of 25.69 is actually cheaper than 70% of its industry peers, and the forward P/E drops to 17.28, which is cheaper than over 81% of the industry. This creates a favorable setup: you are paying a forward multiple that is below the industry average for a company that is expected to grow earnings at roughly 30%. The PEG ratio reflects this, signaling a valuation that compensates for the growth rate. This is the exact profile the Affordable Growth screen is designed to capture—a stock where the market hasn't fully priced in the future earnings potential.
Profitability and Health: The Supporting Cast
Growth without a stable financial base can be risky. CoreCivic's profitability rating of 6/10 and health rating of 5/10 are not stellar, but they are adequate for the strategy’s framework. The company’s return on equity of 9.27% and return on invested capital of 6.16% both outperform the majority of its peers, indicating that the business is generating reasonable returns on the capital it employs. A profit margin of 5.53% and an operating margin of 10.84% also sit in the upper half of the industry, suggesting operational efficiency is intact.
On the health side, the most reassuring figures are in liquidity. With a current ratio of 2.44 and a quick ratio of 2.44, CoreCivic has more than enough short-term assets to cover its immediate obligations. The debt-to-equity ratio of 0.99 is manageable, though the debt-to-free-cash-flow ratio is high at 53.52, which is a point to monitor. These metrics matter because a company can have strong growth, but if its balance sheet is strained, that growth can evaporate quickly when conditions tighten. CoreCivic’s health is neutral enough to not be a red flag, which is the minimum requirement for an affordable growth candidate.
Reviewing the Full Picture
For a deeper breakdown of the specific ratios and how they compare against the company's 80 industry peers, you can review the complete fundamental analysis report for CXW. This report provides the detailed scoring across growth, valuation, health, profitability, and dividend factors.
Finding More Candidates
CoreCivic is just one example of a stock fitting the affordable growth profile. To uncover other companies with a similar combination of strong growth and reasonable valuation, you can run your own scan using the Affordable Growth screen, which filters for the exact parameters discussed here, allowing you to build a broader watchlist of candidates.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research or consult with a financial professional before making any investment decisions.
Read full article here »