Aspen Aerogels (ASPN) recent sell-off (shares down 50% since August) provides an attractive buying opportunity for long-term growth investors.
Investors were disappointed with Q3 results, in large part because the company reported a $13.0 million net loss, which included a $27.5 million one-time charge from the redemption of the Company's convertible note (without the one-time charge, net income was $14.5 million, a $27.4 million YoY improvement).
This specialty chemicals company continues to grow rapidly (that’s why they needed the convertible note—to fund growth) thanks to its innovative and leading position in producing insulation used in electric vehicle batteries (a space where there is no significant competition in sight).
Given the company’s net income has gone from very negative (as it ramped production for its high-demand product) to now toggling around zero (back-and-forth between GAAP profit and loss from quarter to quarter), the shares are very volatile. However, this is frequently an attractive point to invest, especially considering the shares are down big based in large part due to a one-time convertible note.
The company beat revenue expectations dramatically (and raised guidance) and will continue to win new automobile OEMs and receive increasing orders from existing OEM customers.
A stock like this is not for the faint of heart, but as a small part of a prudently-diversified long-term growth portfolio, Aspen Aerogels is very attractive right now.
Long ASPN.