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Choosing Between Gevo, Inc. (GEVO) and Neptune Technologies & Bioressources Inc. (NEPT)

Gevo, Inc. (NASDAQ:GEVO) shares are down more than -59.60% this year and recently increased 14.11% or $0.59 to settle at $4.77. Neptune Technologies & Bioressources Inc. (NASDAQ:NEPT), on the other hand, is up 70.76% year to date as of 09/11/2018. It currently trades at $4.03 and has returned -9.23% during the past week.

Gevo, Inc. (NASDAQ:GEVO) and Neptune Technologies & Bioressources Inc. (NASDAQ:NEPT) are the two most active stocks in the Specialty Chemicals industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

Growth

Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect GEVO to grow earnings at a 25.00% annual rate over the next 5 years.

Cash Flow

The value of a stock is simply the present value of its future free cash flows. GEVO’s free cash flow (“FCF”) per share for the trailing twelve months was -2.18. Comparatively, NEPT’s free cash flow per share was -0.05. On a percent-of-sales basis, GEVO’s free cash flow was -0.06% while NEPT converted -0.02% of its revenues into cash flow. This means that, for a given level of sales, NEPT is able to generate more free cash flow for investors.

Valuation

GEVO trades at a P/B of 0.08, and a P/S of 1.12, compared to a P/B of 5.21, and a P/S of 16.07 for NEPT. 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 isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. GEVO is currently priced at a -98.01% to its one-year price target of 240.00. Comparatively, NEPT is 27.94% relative to its price target of 3.15. This suggests that GEVO is the better investment over the next year.

Insider Activity and Investor Sentiment



The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. GEVO has a short ratio of 0.37 compared to a short interest of 2.04 for NEPT. This implies that the market is currently less bearish on the outlook for GEVO.

Summary

Neptune Technologies & Bioressources Inc. (NASDAQ:NEPT) beats Gevo, Inc. (NASDAQ:GEVO) on a total of 6 of the 14 factors compared between the two stocks. NEPT is growing fastly, has higher cash flow per share, has a higher cash conversion rate and has lower financial risk. Finally, CDE has better sentiment signals based on short interest.

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