The shares of Cameco Corporation have increased by more than 11.05% this year alone. The shares recently went up by 3.12% or $0.31 and now trades at $10.25. The shares of Allison Transmission Holdings, Inc. (NYSE:ALSN), has slumped by -3.69% year to date as of 04/16/2018. The shares currently trade at $41.48 and have been able to report a change of 9.01% over the past one week.
The stock of Cameco Corporation and Allison Transmission Holdings, Inc. were two of the most active stocks on Monday. 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.Next 5Y EPS Growth: 9.79% versus 33.57%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that CCJ will grow it’s earning at a 9.79% annual rate in the next 5 years. This is in contrast to ALSN which will have a positive growth at a 33.57% annual rate. This means that the higher growth rate of ALSN implies a greater potential for capital appreciation over the years.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. The ROI of CCJ is -2.20% while that of ALSN is 14.30%. These figures suggest that ALSN ventures generate a higher ROI than that of CCJ.Cash Flow
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, CCJ’s free cash flow per share is a positive 14.05, while that of ALSN is positive 4.09.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 CCJ is 5.20 and that of ALSN is 1.50. This implies that it is easier for CCJ to cover its immediate obligations over the next 12 months than ALSN. The debt ratio of CCJ is 0.00 compared to 3.70 for ALSN. ALSN can be able to settle its long-term debts and thus is a lower financial risk than CCJ.Valuation
CCJ currently trades at a forward P/E of 24.17, a P/B of 1.05, and a P/S of 2.37 while ALSN trades at a forward P/E of 11.47, a P/B of 8.43, and a P/S of 2.57. This means that looking at the earnings, book values and sales basis, CCJ 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 CCJ is currently at a -5.62% to its one-year price target of 10.86. Looking at its rival pricing, ALSN is at a -6.43% relative to its price target of 44.33.
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), CCJ is given a 2.40 while 2.40 placed for ALSN. This means that analysts are equally bullish on their outlook for the two stocks 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 CCJ is 7.97 while that of ALSN is just 7.11. This means that analysts are more bullish on the forecast for ALSN stock.
The stock of Cameco Corporation defeats that of Allison Transmission Holdings, Inc. when the two are compared, with CCJ taking 6 out of the total factors that were been considered. CCJ 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, CCJ is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CCJ is better on when it is viewed on short interest.