Let's take a look at 2017 balance sheet and some other financial metrics: Jason Industries has about $428 million in debt and around $41.5 million in cash. That debt load is a potential downside risk if the company were to continue posting losses. However, with $41.5 million in cash, the company appears to have plenty of liquidity, and since it recently posted a slight profit, the debt is less of a concern for me. In addition, $428 million in debt appears reasonable for a company that is generating $650-670 million in revenues each year.
According to the latest data from Shortsqueeze.com, only 108,200 shares are currently short. This represents much less than 1% of the float, and that tells me that shorts do not see major downside risks for this stock. So overall, it seems clear that short sellers do not see much of an opportunity in terms of additional downside risk. However, it appears that insiders and analysts are clearly seeing significant upside potential for this beaten down stock. Insiders have accelerated share purchases recently, and late last year, analysts at Stifel reiterated a buy rating and set a $3.25 price target. That implies potential upside of more than double the current share price.
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My posts are my opinions only and not intended as trading recommendations.
