Allied Motion Technologies Stock: Cheap Industrial Play Can Double

AMOT Stock Worth a Look at Low Valuation

Technology and growth stocks have been attracting some oversold buying, but 82% of Nasdaq stocks remain below their 200-day moving average and are battling to hold.

There are plenty of contrarian opportunities emerging for stock investors who are willing to accept volatility. That’s the case with Allied Motion Technologies, Inc. (NASDAQ:AMOT), down by 47% from its high, which was set in November 2021.

The scale of the selling of Allied Motion Technologies stock has been unjustified, given the company’s strong fundamentals and valuation.

Operating since 1962, Allied Motion Technologies designs motion technologies for a broad range of industries, including aerospace and defense; electronic, industrial, and vehicle. (Source: “Investor Relations Overview,” Allied Motion Technologies, Inc., last accessed June 29, 2022.)

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In my view, AMOT stock is well positioned for the long term, after the global economy grapples with its current slowdown. Things will likely improve and the demand for Allied Motion Technologies’ solutions will likely rise.

Why Allied Motion Technologies Stock Could Double

As just mentioned, shares of Allied Motion Technologies, Inc. are worth a look for contrarian traders. AMOT stock is languishing below its 50-day and 200-day moving averages after flashing a death cross signal in March.

Allied Motion Technologies stock failed to hold at its long-term support level around $30.00. The stock is currently searching for oversold buying and appears to be forming a base.

Chart courtesy of StockCharts.com

If AMOT stock can reclaim $30.00 and its key moving averages—and broader market sentiment improves—I wouldn’t be surprised to see the stock target $34.00 to $38.00, followed by $45.00 to $50.00, more than doubling in price.

Allied Motion Technologies, Inc.’s Valuation Ideal in Current Risk Market

Allied Motion Technologies, Inc.’s five-year revenue history shows growth in each year except 2020, during the COVID-19 pandemic. Since then, the company’s revenues have recovered to above their pre-pandemic level.

The company’s revenue outlook is encouraging. Analysts estimate that Allied Motion Technologies will grow its revenues by 18.6% to $478.5 million this year and by 8.6% to $519.6 million in 2023. (Source: “Allied Motion Technologies Inc. (AMOT),” Yahoo! Finance, last accessed June 29, 2022.)

This implies that Allied Motion Technologies is trading at an attractive 0.7 times its consensus 2023 revenue estimate.

Fiscal YearRevenues (Millions)Growth
2017$252.0N/A
2018$310.623.3%
2019$371.119.5%
2020$366.7-1.2%
2021$403.510.0%

(Source: “Allied Motion Technologies Inc.” MarketWatch, last accessed June 29, 2022.)

In the past five years, Allied Motion Technologies, Inc. has managed to produce earnings before interest, taxes, depreciation, and amortization (EBITDA) income.

The company’s EBITDA followed its revenues higher from 2017 to 2019, prior to dropping in 2020. This was followed by a five-year high of $45.4 million in 2021.

Fiscal YearEBITDA (Millions)Growth
2017$29.3N/A
2018$35.621.4%
2019$44.124.9%
2020$39.5-11.2%
2021$45.515.2%

(Source: Ibid.)

Allied Motion Technologies, Inc. has reported generally accepted accounting principles (GAAP) profits for the past five years. In 2021, the company achieved a GAAP diluted earnings-per-share (EPS) five-year high of $1.66.

On an adjusted basis, shares of Allied Motion Technologies, Inc. are trading at a cheap 13.5 times the company’s consensus 2023 EPS estimate of $1.75 per diluted share. (Source: Yahoo! Finance, op. cit.)

Fiscal YearGAAP Diluted EPSGrowth
2017$0.58N/A
2018$1.1396.2%
2019$1.205.9%
2020$0.95-20.6%
2021$1.6674.36%

(Source: MarketWatch, op. cit.)

The company has also been reporting positive free cash flow (FCF).

Analyst Take

Allied Motion Technologies, Inc. has a market valuation of only $367.0 million, but 142 institutions hold a relatively strong 58.9% position in the company’s outstanding shares. (Source: Yahoo! Finance, op. cit.)

We’ve also been seeing active insider buying, with company insiders buying 130,110 shares of Allied Motion Technologies stock over the last six months.

The recent selling of AMOT stock has more to do with the bearish broader market sentiment than with the company. Therefore, investors might want to consider shares of Allied Motion Technologies, Inc. at their discounted price.