Earnings

Uncovering the next great stocks: SolarEdge Technologies, Inc. (SEDG), NovaGold Resources Inc. (NG)

The shares of SolarEdge Technologies, Inc. have increased by more than 0.59% this year alone. The shares recently went down by -2.65% or -$1.03 and now trades at $37.77. The shares of NovaGold Resources Inc. (NYSE:NG), has slumped by -0.51% year to date as of 10/10/2018. The shares currently trade at $3.91 and have been able to report a change of -0.26% over the past one week.

The stock of SolarEdge Technologies, Inc. and NovaGold Resources Inc. were two of the most active stocks on Wednesday. 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.

Profitability and Returns

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. SEDG has an EBITDA margin of 19.18%, this implies that the underlying business of SEDG is more profitable. These figures suggest that SEDG ventures generate a higher ROI than that of NG.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for SEDG is 4.00 and that of NG is 60.10. This implies that it is easier for SEDG to cover its immediate obligations over the next 12 months than NG. The debt ratio of SEDG is 0.00 compared to 0.57 for NG. NG can be able to settle its long-term debts and thus is a lower financial risk than SEDG.

Valuation



SEDG currently trades at a forward P/E of 11.13, a P/B of 3.52, and a P/S of 2.23 while NG trades at a P/B of 7.67, This means that looking at the earnings, book values and sales basis, SEDG 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.

Analyst Price Targets and Opinions

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 SEDG is currently at a -35.71% to its one-year price target of 58.75.

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 SEDG is 8.92 while that of NG is just 8.87. This means that analysts are more bullish on the forecast for NG stock.




Conclusion

The stock of NovaGold Resources Inc. defeats that of SolarEdge Technologies, Inc. when the two are compared, with NG taking 5 out of the total factors that were been considered. NG 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, NG is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for NG is better on when it is viewed on short interest.

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