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Aqua Metals, Inc. (AQMS) is better stock pick than Finjan Holdings, Inc. (FNJN)

The shares of Aqua Metals, Inc. have increased by more than 3.29% this year alone. The shares recently went up by 35.80% or $0.58 and now trades at $2.20. The shares of Finjan Holdings, Inc. (NASDAQ:FNJN), has jumped by 11.11% year to date as of 02/09/2018. The shares currently trade at $2.40 and have been able to report a change of 34.83% over the past one week.

The stock of Aqua Metals, Inc. and Finjan Holdings, Inc. were two of the most active stocks on Friday. 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. These figures suggest that AQMS ventures generate a higher ROI than that of FNJN.



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 AQMS is 4.00 and that of FNJN is 5.30. This implies that it is easier for AQMS to cover its immediate obligations over the next 12 months than FNJN. The debt ratio of AQMS is 0.20 compared to 0.00 for FNJN. AQMS can be able to settle its long-term debts and thus is a lower financial risk than FNJN.

Valuation




AQMS currently trades at a P/B of 0.86, and a P/S of 49.57 while FNJN trades at a forward P/E of 5.33, a P/B of 4.29, and a P/S of 1.86. This means that looking at the earnings, book values and sales basis, AQMS 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 AQMS is currently at a -85.57% to its one-year price target of 15.25. Looking at its rival pricing, FNJN is at a -52% relative to its price target of 5.00. This figure implies that over the next one year, FNJN is a better investment.

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), AQMS is given a 1.50 while 2.00 placed for FNJN. This means that analysts are more bullish on the outlook for FNJN 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 AQMS is 5.50 while that of FNJN is just 0.53. This means that analysts are more bullish on the forecast for FNJN stock.

Conclusion

The stock of Aqua Metals, Inc. defeats that of Finjan Holdings, Inc. when the two are compared, with AQMS taking 6 out of the total factors that were been considered. AQMS 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, AQMS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AQMS is better on when it is viewed on short interest.

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