Sterling Infrastructure, Inc. (NASDAQ:STRL), might not be a large cap stock, but it led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a US$5.4b market-cap stock, it seems odd Sterling Infrastructure is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let's examine Sterling Infrastructure's valuation and outlook in more detail to determine if there's still a bargain opportunity.

What's The Opportunity In Sterling Infrastructure?

According to our valuation model, Sterling Infrastructure seems to be fairly priced at around 6.2% below our intrinsic value, which means if you buy Sterling Infrastructure today, you'd be paying a fair price for it. And if you believe that the stock is really worth $186.51, then there's not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Sterling Infrastructure's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Sterling Infrastructure?

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 23% over the next couple of years, the future seems bright for Sterling Infrastructure. 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? STRL's optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you've been keeping an eye on STRL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Sterling Infrastructure at this point in time. Case in point: We've spotted 1 warning sign for Sterling Infrastructure you should be aware of.

If you are no longer interested in Sterling Infrastructure, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.