Tuesday's IBD 50 Stocks To Watch pick, chemicals leader Aspen Aerogels, is at a new buy point, as it looks to add to its nearly 100% 2024 advance. That makes Aspen stock one of the best to watch right now.
Aspen's products are used in electric vehicles, lithium-ion batteries and in the energy industry.
On May 2, Aspen Aerogels reported a loss of 2 cents per share, much narrower than the year-ago loss of 24 cents per share. Revenue soared 107% to $94.5 million.
"We believe the Q1 results further demonstrate that we have the capability with existing assets and supply arrangements to deliver $650 million of annual revenue with at least 35% gross margins and 25% Adjusted EBITDA margins," CEO Don Young said in the earnings call.
Young added that the company has a "growing list of automotive OEMs and battery cell manufacturers" that rely on Aspen for aerogels to control heat in EV batteries. The company also makes aerogels to improve the safety of lithium-ion batteries.
For the full 2023, the company lost 66 cents per share — a narrower loss than in the previous three years. Analysts see a recovery in 2024, with estimated earnings of 22 cents per share. And Wall Street expects the company's earnings to grow 224% in 2025, per FactSet estimates.
Current-quarter estimates are for a profit of 6 cents a share, which would be the first quarterly profit in at least eight periods, according to IBD MarketSurge.
Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
Aspen Nears Buy Point
Aspen stock is approaching a 31.74 buy point out of a three-weeks-tight pattern. If the stock breaks out, the 3% buy zone will top out at 32.69. Shares dipped 0.3% Tuesday midday.
Three-weeks-tight patterns are typically used as add-on entries for existing positions. However, aggressive investors could start a new position with such a pattern. Keep in mind that risk is higher because Aspen stock is far extended from its previous base, more than 45% above the previous buy point.
On May 2, Aspen stock staged a bullish breakaway gap past a 18.48 buy point from a double-bottom base. Shares surged more than 56% after the company's better-than-expected Q1 results.
With IBD's recommended equity exposure range at 80%-100%, investors have the flexibility to buy breakouts among top stocks.
Aspen stock shows a strong 95 IBD Composite Rating, according to IBD Stock Checkup, even thought the company is current unprofitable. Strong price action in recent months is helping offset a weak EPS performance.
The relative strength line is already at new highs following the stock's strong price gains in recent weeks. The RS line measures a stock's price performance vs. the S&P 500 and provides insight into a stock's market leadership status.
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Three IBD 50 Growth Stocks To Watch picks from earlier this year are among the best stocks to watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Texas Roadhouse | 157.12 | Flat base | |
| PDD Holdings | 142.32 | Cup with handle | |
| Arm Holdings | 132 | Trendline |
Source: IBD Data As Of May 21, 2024
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