Before December, Insignia systems (NASDAQ:ISIG) was probably not on the radar of most investors. A small name in the marketing space, ISIG shares have faded for many years. But just over a month ago, it began to experience a major price break.
It all started on December 6, when the Insignia announced that it was researching a possible sale of the company. News of this caused more than 200 percent movement higher that trading day. Although it fell by about 31% the next day, this was not the end of his epic price increase.
Since making that initial jump on Dec. 6, from about $ 5 to about $ 15 per share, it has increased since then to about $ 23 per share. Now, however, it has not been exactly close to the current price level. It continued to move wildly over the past month, falling back to about $ 12 per share before returning to a high of $ 20 per share.
Much of the focus in this once sub-radar section was its perceived short-compression potential. However, it is important to note that there are many catalysts in the game that have more to do with the basics of the company. These may be key to its future success. What are these catalysts besides the possible sales mentioned above? Let’s dive in and find out.
Stock ISIG at first glance
Minneapolis, Minnesota-based Insignia Systems offers in-store and on-screen advertising solutions to consumer products businesses. In other words, this is one of the many companies that manage those ads you see on the aisles in supermarkets. Knowing full well that the opportunities in this “old school” industry are limited, Insignia has wisely strived in recent years to become more like a digital marketing company.
The news that it is looking for a buyer is what triggered the big jump in the price of ISIG shares that started last month. But lately, it has been backed by its appeal as a short-lived game. Cat InvestorPlace’s Chris McDonald reported the shares on January 10th short interest rates are currently around 47%.
With this high short interest, it can attract the interest of the Reddit trading community, although this is not certain. Given all this, I wouldn’t buy it just because of the short compression angle. I would buy this for more serious reasons, not as a bet on the psychology of the investor.
Fortunately, there are other possible catalysts on the table that could further lift Insignia shares. Although it is not guaranteed that any or all of them will succeed, they make the situation more interesting than many other similar short-lived stocks.
Lots of possible paths to more upside
With a 5-fold shift in just over a month, you may think ISIG supplies are running out of runways. But even after the recent amazing ride, there are several other factors that could help it rise to even higher prices. Not just the possibility that his distress will last longer than expected.
First, the one we’ve already discussed, its potential as a takeover goal. Since it is currently operating in the red, you may not think this is the type of company you might want to buy from a strategic acquirer or private equity firm. However, there may be some interest in this as a binding acquisition. By merging into a larger operation, the buyer could achieve significant cost savings.
Second, improvements in its business results would likely help raise it. There is a possibility that this may happen in the future as it re-emerges as a digital advertising company. Third, a favorable judgment in antitrust action filed against a much larger competitor could also move the needle.
Simply put, it is short-sighted to write this off as a short-lived game. As with many small-cap names, changes in its capabilities can cause excessive shifts for their stocks.
Judgment on ISIG shares
Earn a “B” rating in mine Portfolio Grader, I will say that investors who are not risk averse might want to skip it. More likely than not, this stock will continue to go wild.
Traders who bought it on a whim may become impatient. Before moving higher on any of the non-compression factors I listed above, Insignia shares could return to $ 10-15 per share. Although there are many possible paths to higher prices, the key word here is it is possible.
It is not guaranteed that the company will find a buyer. It is also far from a lock to successfully reverse its operation. Or to dominate his legal battle with a bigger competitor.
Still, if you’re active in riskier games and looking for one with little choice, ISIG shares may be worth the opportunity.
At the date of publication, neither Louis Navellier nor the InvestorPlace research staff member primarily responsible for this article held (directly or indirectly) any positions in the securities mentioned in this article.
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