Since the company went public, investors in NV5 Global (NASDAQ:NVEE) have enjoyed enormous returns, with shares up more than 500% in about six years. But for more-recent investors, it hasn't gone so well. If you bought shares pretty much anytime since late 2017, there's a good chance you're losing money right now. 

That's an especially bitter pill, considering how well NV5 stock had been doing, and how well the market as a whole has done over the same period:

NVEE Chart

NVEE data by YCharts.

Ouch! So what happened? In short, NV5 cut earnings guidance for 2019, and its initial expectations for 2020 didn't exactly excite Mr. Market. Poof -- there goes a quarter of your market value in a few hours. And the company's share price has steadily inched even lower over the past month.

As of this writing, it's lost about one-third of its value since reporting third-quarter earnings. That's one of the risks of investing in growth stocks: Things can go from amazing to bad quickly, and often with little or no warning. 

So is it time for investors to move on? I don't think so. To the contrary: NV5's long-term prospects continue to look remarkably strong, and the market's reaction (or overreaction) has created an opportunity for investors to buy shares at a great price.

Red arrow facing left while dozens of black arrows point right.

Sometimes you need to zig when the market zags. Image source: Getty Images.

And I'm not just putting it out there as an idea. I have taken my own advice recently, nearly doubling the number of shares I own, and significantly increasing the amount of personal capital I've invested in the company. Here's why: 

1. Infrastructure remains a giant growth business

This is where it starts when considering whether NV5, a small, infrastructure-focused engineering and consulting company, should still be a prospective growth investment. Does the industry it participates in still offer ample growth opportunity?

The answer here is a resounding yes. The Global Infrastructure Hub, an initiative of the G20 group of countries, expects to see almost $80 trillion invested in infrastructure globally between 2007 and 2040, while estimating the need for spending to be $94 trillion. 

That's a lot of money to be spent in coming decades, and it's underpinned by the dual needs to update aging infrastructure in developed nations like the U.S., and expand infrastructure nearly everywhere in the world. A middle-class population boom is happening, and about 1 billion more global urbanites will join the middle class in the next decade and change. 

Sure, much of that money will pay for cement, steel, and skilled labor, but the engineers who design these projects, along with the consultants and project planners who keep them moving forward, will play a crucial role in getting it all done. That's where NV5 Global's opportunity lies. 

2. NV5 still checks the other boxes

When I first bought shares of NV5 about three years ago, a handful of key things underpinned my decision to invest:

  • It's led by its founder, CEO Dickerson Wright. 
  • Wright has a significant personal stake, owning about 25% of the company, and other executives own about 10% more. 
  • Management has a long track record of success delivering on its growth strategy. 

And while correlation isn't causation, companies that have these characteristics tend to do well. A founder at the helm, management with skin in the game, and a record of execution all point to NV5 still having a bright future. 

3. NV5 is downright cheap 

I've owned shares of NV5 for nearly three years, so I've seen them rise and fall multiple times. Moreover, I've taken advantage of prior sell-offs to add to my stake, and I don't see this big drop as anything other than another chance to buy what I see as a great company. 

First, let's look at the "why" behind the big drop. In short, the company lowered its full-year non-GAAP earnings guidance by 16%, dropping it from $3.95 per share at the midpoint to $3.30. Management similarly reduced its GAAP earnings estimate to $2.03 per share at the midpoint. 

Here's the rub: That's a big drop, yes, particularly so close to the end of the year. But it still represents about 20% earnings growth from last year. That's nothing to sniff at. And heading into 2020, the company has a solid book of business, with its backlog up 35% over the past year and management calling for $4.55 per share in adjusted earnings in 2020 at the midpoint of guidance. 

Lastly, as much as it's disappointing to see a guidance cut, NV5 management has a history of setting pretty conservative guidance, and often outperforming it and then raising it when the results exceed expectations. 

Put it all together, and I'm willing to give management the benefit of the doubt on its guidance change this time. After all, it's still delivering double-digit earnings growth, even after a downward revision. Considering that shares trade for less than 23 times the midpoint for 2019 GAAP earnings, and less than 15 times analyst estimates for next year, NV5 looks downright cheap:

NVEE PE Ratio (TTM) Chart

NVEE PE Ratio (TTM) data by YCharts.

Think long term, act when there's opportunity

There's no doubt investors were disappointed by NV5's cut to its earnings guidance. But even after that, the company is still on track to deliver double-digit earnings growth in 2019, and looks likely to do even better in 2020. 

In their haste to move on to the next great growth idea, investors seem to have forgotten about NV5, and why it was worth owning in the first place. I don't think that story has changed, and the company has all the pieces in place to deliver market-crushing returns. You can buy shares at bargain-basement prices now. That's what I did.