If you are looking for a can’t miss stock, then look no further than Goldfield Corp (NYSE: GV). While you might see the dramatic decline in its share price and think this stock isn’t a winner, you are wrong. This company has a lot going for it and the majority of the decline in stock price is due to investor overreaction.
In this post, I will show you why Goldfield is a stock that you are a fool if you don’t invest in it now.
Who Is Goldfield Corp?
Goldfield Corp began in 1906 as a gold mining company. But today the company provides electrical construction and maintenance services for utility companies. More specifically, the company also does the following:
- Builds substations
- Constructs distribution systems
- Handles fiber optic cables
The majority of business for Goldfield comes from the southeastern United States.
What Happened To The Stock Price
If you look at the chart for Goldfield, you will see some wild swings as well as the fact that it is near its 52 week low. Here is what happened.
In 2016 the company was involved in some large, high margin projects that boosted its bottom line. As a result, shareholders bought up the stock. In 2017 after these high margin projects were completed, revenues fell and investors got worried and sold off the stock.
The bottom line is that investors didn’t fully understand what was going on with the stock. As an investor, you need to know that revenues in the company are going to fluctuate greatly as projects get started and completed. It’s the nature of the beast.
Why I Like Goldfield
So why exactly do I think Goldfield is a can’t miss stock? There are many reasons. First is the fact that the stock is undervalued. Investors oversold the stock and now in this market where it is hard to find value, Goldfield is shining bright.
Second is the future growth of the company. The company has a 2 prong strategy for growth, organic and acquisitions. When it comes to acquiring other firms, Goldfield is looking for small under the radar companies that can boost its bottom line. I am confident that they will find good buyout targets.
For organic growth, the company is working on expanding its market and growing its customer base in its current market. As of now, Goldfield operates mainly in the southeastern United States. They are looking to slowly expand beyond this section of the country.
At the same time, they are looking to grow their customer base in the southeast. Right now 3 customers make up 58% of their income, two of which are Duke and Florida Power & Light.
All of the above is great, but here is why it all matters.
First, the new tax bill is looking like it will get passed and signed into law. Experts believe that with the lower tax rate, corporations are going to do the following:
- Hire more employees
- Start stock buyback programs
- Reinvest in operations
The third point is key for Goldfield. The US infrastructure is in shambles. With a windfall of money from lower taxes, electric utilities are going to want to start updating their systems and this is where Goldfield comes into play.
In addition to this, President Trump will talk about funding a boom in updating this country’s infrastructure. If any money from the government goes towards this, it is icing on the cake for Goldfield.
Goldfield Corp is a volatile stock mainly because investors didn’t understand the nature of the beast. But this small electric construction and maintenance player has an amazing future thanks to the tax bill.
If any new legislation comes addressing infrastructure, then this stock is literally gold. But even without any new legislation, I feel this company and its stock are moving higher in the coming years.
At less than $10 a share, based on its financials, this stock is a steal at its current price.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.