OncoSec Medical Incorporated (NASDAQ:ONCS) shares are up more than 9.54% this year and recently increased 4.09% or $0.07 to settle at $1.78. Cheetah Mobile Inc. (NYSE:CMCM), on the other hand, is up 1.49% year to date as of 05/16/2018. It currently trades at $12.26 and has returned 0.66% during the past week.
OncoSec Medical Incorporated (NASDAQ:ONCS) and Cheetah Mobile Inc. (NYSE:CMCM) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, CMCM is expected to grow at a 9.13% annual rate. All else equal, CMCM’s higher growth rate would imply a greater potential for capital appreciation.Cash Flow
If there’s one thing investors care more about than earnings, it’s cash flow. ONCS’s free cash flow (“FCF”) per share for the trailing twelve months was -0.18. Comparatively, CMCM’s free cash flow per share was -.Liquidity and Financial Risk
Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. ONCS has a current ratio of 6.70 compared to 2.50 for CMCM. This means that ONCS can more easily cover its most immediate liabilities over the next twelve months. ONCS’s debt-to-equity ratio is 0.00 versus a D/E of 0.08 for CMCM. CMCM is therefore the more solvent of the two companies, and has lower financial risk.Valuation
ONCS trades at a P/B of 3.42, compared to a forward P/E of 16.73, a P/B of 2.53, and a P/S of 2.22 for CMCM. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. ONCS is currently priced at a -60.44% to its one-year price target of 4.50. Comparatively, CMCM is 2.85% relative to its price target of 11.92. This suggests that ONCS is the better investment over the next year.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. ONCS has a beta of 3.03 and CMCM’s beta is 3.38. ONCS’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. ONCS has a short ratio of 3.47 compared to a short interest of 7.25 for CMCM. This implies that the market is currently less bearish on the outlook for ONCS.Summary
OncoSec Medical Incorporated (NASDAQ:ONCS) beats Cheetah Mobile Inc. (NYSE:CMCM) on a total of 8 of the 13 factors compared between the two stocks. ONCS higher liquidity and has lower financial risk. In terms of valuation, ONCS is the cheaper of the two stocks on an earnings and sales basis, ONCS is more undervalued relative to its price target. Finally, ONCS has better sentiment signals based on short interest.