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Small cap stock that could be a hidden gem

Small cap stock that could be a hidden gem
Elmaz Sabovic

When it comes to reporting and trading, small-cap stocks usually get overlooked due to the lack of information, interest, or both. However, in the sea of options, hidden gems hold the potential to increase their value multiple times in the future, and Aspen Aerogels (NYSE: ASPN) might be one of these.

A small-cap stock represents publicly traded company shares with a market capitalization typically between $250 million and $2 billion.

In their Q4 report 2023, Aspen pre-announced that the total revenue reached $84.2 million, reflecting an increase from $59.6 million in Q4 2022.

Net loss narrowed to $0.5 million, compared to $9.6 million in Q4 2022, with a net loss per share of $0.01, an improvement from $0.20.

Aspen financial targets and results. Source: Aspen Aerogels
Aspen financial targets and results. Source: Aspen Aerogels

For 2023, total revenue was $238.7 million, up from $180.4 million in 2022. Net loss decreased to $45.8 million from $82.7 million in 2022, with a net loss per share of $0.66, an improvement from $2.10 in 2022.

Conservative guidance that might lead to surprises

With the Aspen management staying humble and placing their predictions in the lower range regarding the guidance, investors might be in for a positive surprise.

The projected total revenue is anticipated to exceed $350 million, comprising approximately $150 million attributed to energy industrial revenues and $200 million from thermal barrier revenues. Adjusted EBITDA is forecasted to be a minimum of $30 million. The anticipated net loss is projected to remain below $23 million, with a corresponding net loss per share expected to be less than $0.30.

ASPN anticipates a financial loss in 2024, which is projected to be less than $20 million. However, a shift towards profitability is foreseen in 2025, driven by expanding profit margins, particularly in their thermal barrier product line. This growth trajectory is expected to be bolstered by increased production capacity facilitated by the commencement of operations at their new facility.

Price analysis of ASPN stock

As the Q4 results got pre-announced, and the earnings call is scheduled for today, February 13, Aspen stock is trading at $13.95, up 12.50% in after-hours trading markets. This stock added 13.14% to its value in the past five trading sessions.

ASPN 24-hour stock price chart. Source: Google Finance
ASPN 24-hour stock price chart. Source: Google Finance

In the short term, ASPN’s outlook is neutral, while the long-term trend remains positive. This stock outperforms 82% of its industry peers and is in line with market performance, surpassing 67% of other stocks. Although it trades within its 52-week range, it lags behind the S&P 500, which is nearing record highs.

Over the past month, ASPN’s trading range has been between $10.75 and $13.13, currently positioned midway within this range, suggesting potential resistance levels above.

Technical indicators for ASPN stock. Source: ChartMill
Technical indicators for ASPN stock. Source: ChartMill

The support zone spans from $11.21 to $11.53, delineated by the convergence of various trend lines and significant moving averages across multiple time frames. Additionally, a resistance level is identified at $14.23, established by a trend line observed within the weekly time frame.

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