Bull of the Day: Beam Global (BEEM)
Scotty is about to BEEM this stock up thanks to a massive short squeeze that is powered by revenue growth.
Beam Global (BEEM) is a Zacks Rank #2 (Buy) that sports an F for Value and for Growth as well. This EV play has a massive short position and the potential for a huge squeeze play is in the making. Is this the next Tesla style “Mother Of All Short Squeezes”? It very well could be so let’s explore more about that idea in this Bull Of The Day article.
Beam Global produces patented infrastructure products for the electrification of transportation. It produces products for electric vehicle charging, outdoor media and energy security. Beam Global, formerly known as Envision Solar, is based in San Diego California.
Squeeze Me, Come On And Squeeze Me!
The most important part of a squeeze play is making sure the shorts are in the stock in a big way.
The next step is outlining why the shorts are barking up the wrong tree.
Once they realize the retail holders are not selling, but rather increasing their position, the squeeze will start.
One word of advice to the shorts, if you are going to panic, do so early.
BEEM has 8.9M shares outstanding and roughly 7.5M shares in the float. Of the shares in the float, about 34% of those shares are sold short.
The data we get on shares sold short has a lag. It’s a big lag actually, but when we look at the last two readings of the number of shares should short we see the covering has already begun.
Currently there are 2,560,000 shares sold short while the prior reading came in at 2,670,000. That is a decrease of 4%... and there is plenty more covering to come.
Short sellers have a way of all targeting the same stock at the same time. They did this same thing with Tesla (TSLA) too, as they piled into short sales and then long put positions.
The problem with this is that there are too many shares sold short. When the shorts start to cover and the price starts to soar, the exits will be jammed and it will be that much harder to exit this short position.
The Thing Shorts Hate To See
In a word, the thing that shorts hate to see is GROWTH. I love growth, after all, I am the aggressive growth stock strategist here at Zacks Investment Research.
BEEM has posted some nice growth numbers already and they are only going to get bigger.
The most recent quarter saw topline growth of 63%. That probably drove more than a few shorts to cover as they recalled that November 2019 earnings report from Tesla (TSLA). That was the start of a titanic run that crushed the shorts thanks to the solid growth they posted.
For the full year 2021, analysts are expecting topline growth of about 41%. That is good, but it is the growth expectation for next year that is going to cause some weakness in the knees of the shorts.
Sales growth of 156% is expected for 2022 and that is the type of thing that strikes fear the in heart of all the shorts. There are few things in the investing world like a growth story that has a big short position present already.
When I look at a stock, the one of the first things I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For BEEM, I see a bad history of beating the Zacks Consensus Estimate. There is one beat over the last four quarters.
The silver lining to that storm cloud is the most recent quarter was the beat.
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For BEEN, I see annual estimates moving higher.
Over the last 60 days, I see a few increases.
This quarter has increased by two cents.
The full year 2021 has moved from a loss of $0.78 to a loss of $0.72.
Next year has held still at a loss of $0.60.
There is no trailing or forward earnings multiple for BEEM. The price to book multiple is 6.5x which is still reasonable for a growth story that has a long road ahead of it. The price to sales multiple checks in at 23x, but that number will come down as the sales start to ramp.
Near the start of November, this stock was testing the $40 level. It has since been nearly cut in half and trades around $21.
The whole EV space is probably going to participate in a Santa Claus rally on 12/23/21. I say this after TSLA rallied for 6.8% a day ago as CEO Elon Musk noted that he is done selling shares and one other item of note.
Nikola (NKLA) popped by around 5% after the close on 12/22 after they tweeted that they have made their first delivery. The short position for NKLA is 23%, so that too is a crowded trade.
Beam Global Price, Consensus and EPS Surprise
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Beam Global (BEEM): Free Stock Analysis Report
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