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VOXX shares have dropped 59% since their highs in mid February. But the stock recently broke its downtrend and looks set for a recovery.

Recent news came out that its subsidiary Premium Audio Company, LLC, and Sharp Corporation have successfully acquired certain assets of the audio/video business of Onkyo Home Entertainment Corporation. The total purchase price is $30.8 million, plus the assumption of certain liabilities and future commission payments to Onkyo on certain product sales. PAC owns approximately 77% of the joint venture, with Sharp owning approximately 23%.

The acquisition of Onkyo will see PAC market and sell Pioneer and Pioneer brands worldwide due to the licensing agreement with Pioneer. The CEO stated “This is a significant milestone for our Company as the acquisition significantly strengthens our brand portfolio and product offering, while enhancing our customer value proposition.” 

Road to recovery

The addition to the company saw VOXX break a strong downtrend. This will pick up the interest of investors. The stock is now above the daily 9EMA and 20EMA, whilst also breaking above the 50DMA. Higher lows will be something to look out for, as investors will want to see confirmation of this trend reversal.

Earnings are due on October 12th. A strong earnings report could see huge momentum in the recovery of VOXX shares. Sales are set to increase to $620M and $677M for this year and next year respectively. VOXX is a profitable company so has great fundamental value and is not based only on future growth potential.

Insider buying of VOXX shares

Insider buying is always good to see, and insider selling is a caution to keep an eye on. Fortunately for investors, there’s lots of insider buying for VOXX. Recently seen was insider buys well above $11 a share. This gives an indication that management sees value here.

Financials

The company holds $37M of cash and cash equivalents, meaning the company is trading at 7x its cash position. A good amount of cash available will help them deal with any curveballs in the future. But it is good to see that they do not have an unnecessary amount of cash not being used which would be an opportunity cost.

Overview

I like this stock for a recovery/oversold position. The fundamentals are good and so is the recent news of the addition to the company. The technicals of the chart are set for a reversal with a good amount of buying volume coming in as well as the insider buying. $14.50 is my first target for the stock with a risk $9.60 (recent lows).

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