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Posted On: 05/05/2017 2:07:14 PM
Post# of 2218
$CHGG The Best Cheap Stocks to Buy for $10 or Less: Chegg (CHGG)
Stock Price: ~$8.40
I wrote last month that learning platform operator Chegg Inc (NYSE:CHGG) was a clear candidate for a short squeeze, but that squeeze hasn’t happened yet. CHGG stock still trades near resistance just above $8 — and still some 21% of its float remains sold short.
Chegg’s earnings are due on May 1, and that could be a catalyst for a short squeeze — and/or more organic upside. Chegg shares aren’t cheap, but the company continues to grow its user base among college and high school students. The low-margin textbook rental business has been shifted to an unrelated third party. What’s left is a high-margin platform of tutoring services, study help and e-textbook rentals with significant operating leverage and long-term network effects.
Chegg shares might be cheap on a nominal basis, but unlike PFSW, it’s hard from cheap on a valuation basis; CHGG trades at more than 30 times EBITDA. However, growth stocks rarely are cheap — and as long as Chegg can keep its revenue growth going, and tantalize investors with future profits, the shorts eventually will have to change their tune.
Stock Price: ~$8.40
I wrote last month that learning platform operator Chegg Inc (NYSE:CHGG) was a clear candidate for a short squeeze, but that squeeze hasn’t happened yet. CHGG stock still trades near resistance just above $8 — and still some 21% of its float remains sold short.
Chegg’s earnings are due on May 1, and that could be a catalyst for a short squeeze — and/or more organic upside. Chegg shares aren’t cheap, but the company continues to grow its user base among college and high school students. The low-margin textbook rental business has been shifted to an unrelated third party. What’s left is a high-margin platform of tutoring services, study help and e-textbook rentals with significant operating leverage and long-term network effects.
Chegg shares might be cheap on a nominal basis, but unlike PFSW, it’s hard from cheap on a valuation basis; CHGG trades at more than 30 times EBITDA. However, growth stocks rarely are cheap — and as long as Chegg can keep its revenue growth going, and tantalize investors with future profits, the shorts eventually will have to change their tune.
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