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Why CACI International (CACI) is a Promising Portfolio Pick Now
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CACI International (CACI - Free Report) is a stock that investors should consider adding to their portfolio to benefit from its upside potential.
Tech stocks made a remarkable run in 2023 after a massive sell-off in 2022 on recession concerns, inflationary pressure, increased oil prices and higher interest rates. With a rise of 43.4% in 2023, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 Index’s increase of 13.7% and 24.8%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 26.2% in 2023.
However, CACI is among such stocks that have been left behind in last year’s tech rally. The stock has surged 7.7% in 2023 compared with the Zacks Computer – Services industry’s rise of 18.8%. Therefore, considering the company’s impressive growth profile and attractive valuation, we believe it is the right time to invest in the stock.
CACI stock currently trades lower than the 52-week high, which reflects its potential to go upward. The stock’s closing price of $326.29 on Jan 2, 2024, is 10.1% lower than the 52-week high of $359.33 attained on Aug 8, 2023.
Moreover, CACI International currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-sales multiple of 0.97X compared with its five-year average of 1.21X. It also trades at a significant discount to the Zacks Computer – Services industry’s one-year forward price-to-sales multiple of 1.70X.
Additionally, amid ongoing macroeconomic headwinds and geopolitical issues, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, CACI carries a Zacks Rank #2 (Buy) and has a Growth Score of B at present. The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities.
Long-Term Growth Drivers
A healthy relationship with the Department of Defense ("DoD") and exposure to expanding DoD and Department of Homeland Security budgets are key growth catalysts for CACI.
The company has a large pipeline of new projects and continues to win deals at regular intervals. During the latest reported financial results for first-quarter fiscal 2024, CACI’s contract awards totaled $3.1 billion, with approximately 50% for the new business. It ended the quarter with a backlog of $26.7 billion, up 7% on a year-over-year basis. As of Sep 30, 2023, the funded backlog increased 14% to $4.2 billion.
These back-to-back contract wins are the key catalysts driving the company’s success. Furthermore, having the government as a major client lends stability to the business and moderates fluctuations in revenues.
The company remains focused on the federal government marketplace and has more market share. The company intends to drive operational excellence by intensively focusing on its organic and inorganic growth strategy and strengthening its existing customer relationships while building newer ones.
CACI International also remains focused on its strategy to grow in larger markets and leverage mergers and acquisitions to further increase its market share and create long-term value for its shareholders. The company has acquired 20 companies and its last buyout was ID Technologies in January 2022 for $225 million. The acquisition has expanded CACI’s secure network modernization capabilities via the CSfC software.
The Zacks Consensus Estimate for Kanzhun's fourth-quarter 2023 earnings has been revised downward by 2 cents to 16 cents per share in the past 30 days. Shares of BZ have declined 33.6% in the past year.
The Zacks Consensus Estimate for Ceridian HCM’s fourth-quarter 2023 earnings has been revised by a penny northward to 32 cents per share in the past 90 days. Shares of CDAY have gained 4.7% in the past year.
The Zacks Consensus Estimate for Everbridge’s fourth-quarter 2023 earnings has declined by a penny in the past 60 days to 49 cents per share. Shares of EVBG have declined 20.1% in the past year.
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Why CACI International (CACI) is a Promising Portfolio Pick Now
CACI International (CACI - Free Report) is a stock that investors should consider adding to their portfolio to benefit from its upside potential.
Tech stocks made a remarkable run in 2023 after a massive sell-off in 2022 on recession concerns, inflationary pressure, increased oil prices and higher interest rates. With a rise of 43.4% in 2023, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 Index’s increase of 13.7% and 24.8%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 26.2% in 2023.
However, CACI is among such stocks that have been left behind in last year’s tech rally. The stock has surged 7.7% in 2023 compared with the Zacks Computer – Services industry’s rise of 18.8%. Therefore, considering the company’s impressive growth profile and attractive valuation, we believe it is the right time to invest in the stock.
CACI International, Inc. Price and Consensus
CACI International, Inc. price-consensus-chart | CACI International, Inc. Quote
Why Should You Invest in CACI Stock?
CACI stock currently trades lower than the 52-week high, which reflects its potential to go upward. The stock’s closing price of $326.29 on Jan 2, 2024, is 10.1% lower than the 52-week high of $359.33 attained on Aug 8, 2023.
Moreover, CACI International currently trades at an attractive valuation multiple. The stock trades at a one-year forward price-to-sales multiple of 0.97X compared with its five-year average of 1.21X. It also trades at a significant discount to the Zacks Computer – Services industry’s one-year forward price-to-sales multiple of 1.70X.
Additionally, amid ongoing macroeconomic headwinds and geopolitical issues, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.
Apart from having solid fundamentals, CACI carries a Zacks Rank #2 (Buy) and has a Growth Score of B at present. The Growth Style Score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities.
Long-Term Growth Drivers
A healthy relationship with the Department of Defense ("DoD") and exposure to expanding DoD and Department of Homeland Security budgets are key growth catalysts for CACI.
The company has a large pipeline of new projects and continues to win deals at regular intervals. During the latest reported financial results for first-quarter fiscal 2024, CACI’s contract awards totaled $3.1 billion, with approximately 50% for the new business. It ended the quarter with a backlog of $26.7 billion, up 7% on a year-over-year basis. As of Sep 30, 2023, the funded backlog increased 14% to $4.2 billion.
These back-to-back contract wins are the key catalysts driving the company’s success. Furthermore, having the government as a major client lends stability to the business and moderates fluctuations in revenues.
The company remains focused on the federal government marketplace and has more market share. The company intends to drive operational excellence by intensively focusing on its organic and inorganic growth strategy and strengthening its existing customer relationships while building newer ones.
CACI International also remains focused on its strategy to grow in larger markets and leverage mergers and acquisitions to further increase its market share and create long-term value for its shareholders. The company has acquired 20 companies and its last buyout was ID Technologies in January 2022 for $225 million. The acquisition has expanded CACI’s secure network modernization capabilities via the CSfC software.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology sector are Kanzhun (BZ - Free Report) , Ceridian HCM and Everbridge (EVBG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Kanzhun's fourth-quarter 2023 earnings has been revised downward by 2 cents to 16 cents per share in the past 30 days. Shares of BZ have declined 33.6% in the past year.
The Zacks Consensus Estimate for Ceridian HCM’s fourth-quarter 2023 earnings has been revised by a penny northward to 32 cents per share in the past 90 days. Shares of CDAY have gained 4.7% in the past year.
The Zacks Consensus Estimate for Everbridge’s fourth-quarter 2023 earnings has declined by a penny in the past 60 days to 49 cents per share. Shares of EVBG have declined 20.1% in the past year.