Ocugen’s Facing a Major Uphill Climb Without FDA Approval
At the end of June, I wrote about Ocugen (NASDAQ:OCGN) and OCGN stock. I said that at $8.35, it was ridiculously overvalued. I also said if it were worth $8, I’d eat my hat.
Naturally, once OCGN stock blew through $8 on Aug. 9, I’d hear from the peanut gallery about my statement.
Someone who goes by the name @BBQ_RIBS messaged me on Aug. 10, stating, “$OCGN @willashworth how does that hat taste?”
Of course, I responded to BBQ_RIBS’s message by stating, “@BBQ_RIBS oh, I’m sorry. Did $OCGN get FDA approval. I must have missed that.” Since @BBQ_RIBS’s Aug. 10 post, OCGN is down almost 23% through Aug. 17.
I don’t wish losses on anybody. However, if my StockTwits detractor hasn’t sold, I hope they reevaluate their reasons for holding the stock.
The reality is that a quick approval process for Occugen’s Covaxin Covid-19 vaccine is not in the cards. The easy money — OCGN is up 1,312% over the past year — has already been made.
I wouldn’t write off Ocugen eventually getting approval for its vaccine, but in the meantime, consider the opportunity cost of holding OCGN stock.
There are much better investments at $7 and change. Here are three possibilities trading within $6.50 and $7.50.
Out With OCGN Stock. In With HITI
Trading about three cents off OCGN’s share price as I write this, High Tide (NASDAQ:HITI) is the first major publicly traded cannabis retailer to trade on Nasdaq. It began trading on June 2.
Based in Calgary, Alberta, High Tide has 90 locations in four Canadian provinces: Alberta, Saskatchewan, Manitoba, and Ontario. Its primary retail banners are Canna Cabana and KushBar.
On Aug. 6, High Tide closed its acquisition of five Regina retail cannabis locations. One is operational, while four are in development. They should all be up and running by the end of the year. High Tide paid 2.7 million CAD ($2.14 million) in cash and stock.
If I were the Saskatchewan shareholders, I’d hang on to HITI. It’s going places.
Telemedicine Is Here to Stay
No, I’m not recommending you buy Teladoc (NYSE:TDOC) at $136, although I do think it’s a good long-term buy. Instead, I’m suggesting investors consider Hims & Hers Health (NYSE:HIMS) despite the fact it has a god-awful trade name.
The company reported Q2 2021 results on Aug. 11. Sales rose 69% year-over-year to $60.7 million while raising its full-year revenue to $253 million at the midpoint of its guidance. On the bottom line, it expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of at least $35 million.
That’s to be expected as it scales its telehealth platform. However, over the past four quarters, it’s increased the number of subscriptions from 258,000 at the end of June 2020 and 453,000 at the end of June 2021, a 76% YOY increase.
“I believe the majority of healthcare delivery will begin on a platform like ours in the future. For that reason, everything we do is in service of an opportunity that we believe will continue to accelerate and grow over years, both in the US and overseas,” CEO Andrew Dudum stated in its Q2 2021 press release.
I think he’s bang-on.
The All-Inclusive Value Play
I had considered Lidar (light detection and ranging) company Velodyne Lidar (NASDAQ:VLDR), trading around $6.60 as I write this, but the company’s C-suite appears to be imploding, so I opted for Playa Hotels & Resorts (NASDAQ:PLYA) instead.
Playa Hotels & Resorts is an owner and operator of all-inclusive beachfront resorts in Mexico and the Caribbean. It owns and/or manages 22 resorts with more than 8.300 rooms.
As you would imagine, Covid-19 has stuck a pin in Playa’s balloon. It recently reported Q2 2021 results. The first six months of the year through June 30 had an adjusted loss of $60.5 million, $1.6 million higher than a year earlier. However, the loss for the second quarter was just $9.6 million, considerably lower than a year ago.
“I am optimistic as we near our high season and prepare for 2022. As of mid-July, our revenue on the books for Q3 2021 is nearly 30% above Q3 2019 levels for our owned and managed resorts with ADRs [average daily rates] driving the bulk of the gains,” stated CEO Bruce Wardinski in its Q2 2021 press release.
“Our Q4 2021 revenue on the books is nearly 40% above Q4 2019 levels for our owned and managed resorts with ADRs up mid-teens and building.”
In 2019, Playa had revenues of $636.5 million and an operating profit of $25.7 million. If it can exceed its 2019 results, there’s no question it can retest $10.
Former Democratic presidential candidate Tom Steyer’s old firm, Farallon Capital, is Playa’s largest shareholder. It owns 8.5% of the company as of April 2021.
Bottom Line
Of the six analysts who cover its stock, four rates it a buy, with a median target price of $10.50. As travel rebounds, so too will PLYA stock. However, expect volatility given the Delta variant.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
