The shares of Applied Materials, Inc. have increased by more than 73.18% this year alone. The shares recently went down by -2.07% or -$1.2 and now trades at $56.70. The shares of Just Energy Group Inc. (NYSE:JE), has slumped by -31.21% year to date as of 12/02/2019. The shares currently trade at $2.27 and have been able to report a change of -11.67% over the past one week.
The stock of Applied Materials, Inc. and Just Energy Group Inc. were two of the most active stocks on Monday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. AMAT has an EBITDA margin of 27.28%, this implies that the underlying business of AMAT is more profitable. These figures suggest that AMAT ventures generate a higher ROI than that of JE.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, AMAT’s free cash flow per share is a positive 3.61, while that of JE is positive 2.08.Valuation
AMAT currently trades at a forward P/E of 12.95, a P/B of 6.49, and a P/S of 3.61 while JE trades at a forward P/E of 4.37, This means that looking at the earnings, book values and sales basis, AMAT is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of AMAT is currently at a -15.42% to its one-year price target of 67.04. Looking at its rival pricing, JE is at a -71.19% relative to its price target of 7.88.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), AMAT is given a 2.10 while 1.70 placed for JE. This means that analysts are more bullish on the outlook for AMAT stocks.Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for AMAT is 2.54 while that of JE is just 4.16. This means that analysts are more bullish on the forecast for AMAT stock.
The stock of Applied Materials, Inc. defeats that of Just Energy Group Inc. when the two are compared, with AMAT taking 7 out of the total factors that were been considered. AMAT happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, AMAT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AMAT is better on when it is viewed on short interest.