We recently published a list of 15 Worst 52-Week Low Stocks to Buy Now According to Short Sellers. In this article, we are going to take a look at where Navitas Semiconductor Corp (NASDAQ:NVTS) stands against the other worst 52-week low stocks to buy now according to short sellers.
The U.S. Federal Reserve conducting a 50 basis point interest rate cut was the catalyst that stocks needed to bounce back from a period of stagnation. After weeks and months of uncertainty about what the Fed would do, certainty is slowly creeping into the market, helping bolster investor sentiments.
With the S&P 500 back to record highs, it’s the Nasdaq 100 that appears to be making the most significant moves, having gained more than 3% in the aftermath of the 50 basis point interest rate cut. The spike in the tech-heavy U.S. index is a clear indicator that tech stocks are well poised to edge higher after weeks of stagnation.
The interest rate cut is expected to positively impact short-term bank borrowing costs, making it easy for people and businesses to access cheap capital to fuel economic activity that has been slowing in recent months. Additionally, it should positively impact various consumer products like mortgages, auto loans, and credit cards.
While there were concerns that the U.S. economy was slowing due to disappointing employment data and a slowdown in the manufacturing sector, Fed Chair Jerome Powell reiterated that the 50 basis point cut was all about ‘recalibrating’ the economy.
Initially, there were concerns that the FED coming through with a 50 basis point would fuel fears about the health of the U.S. economy and consequently rattle stocks. However, that was not the case as stocks rallied, signaling that investors were optimistic about the economy and long-term outlook in the market.
Tom Porcelli, top U.S. economist at PGIM Fixed Income Policy, thinks the Fed policy was set up to handle much more inflation. Now that inflation is getting close to the target, the Fed can start to ease off on the tight money they’ve been applying. Consequently, the aggressive interest rate cut is not because we’re heading into a recession but because we want to keep the economic growth going.
While the focus will be on stocks that have been edging higher for the year, the focus is slowly shifting to stocks that have bottomed and that market participants are bearish on. Stocks that have been battered to 52-week lows are increasingly turning out to be bargains, especially on the monetary policy improving after months of uncertainty. Nevertheless, it is unclear whether stocks with high short interest rates will bounce back after coming under immense pressure over the past nine months.
With the Fed cutting interest rates with a bang, CNBC commentator and Fast Money host Jim Cramer believes investors should start paying attention to stocks well poised to benefit from a low interest rate environment. Some stocks to consider are companies providing products and services that depend on consumers’ purchasing power.
Our Methodology
We used the Finviz screener to find stocks that were trading near their 52-week lows and that had high short interest (at least 5%). We then picked the stocks with the highest short interest and ranked them in ascending order of this metric. We have also added the hedge fund sentiment for these stocks.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a large solar panel array under construction in a rural China landscape.
Navitas Semiconductor Corp (NASDAQ:NVTS)
52 Week Range: $2.2 – $8.4
Current Share Price: $2.4
Short % of Shares Outstanding: 15.21%
Number of Hedge Funds holding stakes as of Q2 2024: 15
Navitas Semiconductor Corp (NASDAQ:NVTS) is a semiconductor company that designs, develops, and markets integrated circuits associated with high-speed silicon system controllers and digital isolators for power conversion and charging. Its product is mostly used in mobile, consumer, data center, solar, electric vehicle, and industrial motor drive.
Navitas Semiconductor Corp (NASDAQ:NVTS) is growing its footprint in the A.I. data centers and electric vehicle sectors, boasting over 200 client projects and a string of design victories. The firm expects to see its initial Gann EV income by the year’s end. Even with a dip in the solar sector, Navitas is moving forward, with over 100 projects underway.
The stock has been under pressure for the better part of the year owing to growing concerns about consumer spending on the company’s core products. Additionally, the company faces stiff competition from Chinese companies amid mixed messages from the auto industry.
In addition, Navitas Semiconductor Corp (NASDAQ:NVTS)’s sentiments on Wall Street have taken a significant hit in the aftermath of management shake-ups. Confirming that current CFO and Treasurer Janet Chou is poised to step down in October is increasingly sending jitters. The company has had to state that the exit of the current CFO is not related to financial statements or disclosures.
While the company delivered a 40% year-over-year increase in revenue in Q2 2024 to $20.5 million attributed to its gallium nitride, it struggled to post a profit. Consequently, it reported an operating net loss of $13.3 million.’
As Navitas tries to navigate its financial health and management transition, short interest in the stock has increased to 15.21%. By the end of June, 15 funds held long positions in Navitas Semiconductor Corp (NASDAQ:NVTS), an increase from 11 in the previous quarter.
Overall NVTS ranks 4th on our list of worst 52-week low stocks to buy now according to short sellers. While we acknowledge the potential of NVTS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVTS, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.