nLIGHT, Inc. (NASDAQ:LASR) is one of the stocks Jim Cramer offered insights on. Cramer noted that the company hasn’t been profitable for the last few years, as he stated:
“I have no idea whether the technology makes sense, but it sure seems like the defense department is willing to spend money on it, which might be all that matters. Now, there’s one thing that’s been nagging at me with this one… It’s a simple fact that nLIGHT doesn’t have a great track record when it comes to, you know, making money. The company hasn’t been profitable for the last three… years. And perhaps worse, its sales peaked way back in 2021 before declining each of the past three years, falling from $270 million in 2021 to under $200 million last year. When you look at those numbers, it’s no wonder nLIGHT stock sunk to an all-time low earlier this year.
But most of that historical weakness was caused by a combination of poor performance from nLIGHT’s industrial business and the fact that the company had to ramp up spending in order to build the types of directed energy weapons that the defense department wants. Plus, this year, their financials have improved significantly… When the company turned in its latest numbers in early November, they delivered another excellent quarter…
So, where do I ultimately come down on nLIGHT? When I saw the stock’s tremendous gains and noticed that the company was focused on laser guns, I was worried that this might be another year of magical investing stock. But after looking into the story in depth, this is a real established company with a legitimate business that has great potential in the future of warfare. The stock’s been roaring this year because it should be. The numbers have gotten better and better. Plus, it’s very encouraging to me that nLIGHT stock has held up so well, right as so many of the other year of magical investing names have fallen by the wayside.
That said, considering how much the stock has run, I find it very hard to recommend this one up here. Right now, nLIGHT’s selling for roughly 80 times its 2027, 27, not 6, 27 earnings estimates. It was just pretty rich…. Also, and this is more instinct than science, I’m a bit worried that while nLIGHT might not be a year of magical investing stock, it certainly traveled with many of those names and could get hurt by a broader cool-off in momentum stocks, and these keep happening. So far, it hasn’t happened, but if momentum names keep getting hit, this one might cool down, too. So, here’s the bottom line: I wouldn’t put new money to work in nLIGHT at these levels, given how much the stock’s run. If you already own it, I say sell enough shares to cover your cost basis so that you’re playing with the house’s money. If you don’t own it and you like the story, I recommend waiting for a pullback, which seems highly likely to me at some point. But if the pullback comes and nLIGHT keeps putting up good numbers, then you’d better believe I’d be a buyer.”
Pixabay/Public Domain
nLIGHT, Inc. (NASDAQ:LASR) makes semiconductor and fiber lasers for industrial, aerospace, and defense use. The company also provides high-energy laser systems and components for precision and directed energy applications.
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Disclosure: None. This article is originally published at Insider Monkey.
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