TransEnterix (NYSEAMERICAN:TRXC) will soon trade under the name Asensus Surgical. It’s the same company with the same ticker symbol. But the new name will better reflect the company’s lead product, the Senhance Surgical System. TRXC stock has been nearly cut in half during the last two weeks of February, but it still presents an intriguing opportunity for investors.
In fact, TransEnterix is likely to be a better option than any of the “meme” stocks that many retail investors have been bidding higher. It’s a reminder to investors that a little bit of homework can go a long way.
How is TransEnterix Different?
The phenomenon that is the tale of the meme stocks is a tale as old as time. Find a stock that’s trading for pennies pump it higher, and then dump the shares for a profit. On the other side of the trade, you have individuals and in many cases institutional investors, who are shorting the stock when they see it going up.
The problem comes for those investors who get stuck in the middle of these trades. Maybe it’s a fear of missing out (FOMO), but many retail investors are discovering that many stocks trade at very cheap prices for very good reasons.
Some call it fundamentals, but math is tricky for many stocks these days. I tend to look at the story behind the stock. In the case of a stock like GameStop (NYSE:GME), I don’t like the story. Ditto that for AMC Entertainment (NYSE:AMC). These stocks have problems with their fundamental business models. And those problems existed prior to the pandemic.
But many investors are looking at the stocks as if the problems go away if the stock price gets cheap enough. They don’t although it’s possible that the bump in stock price may allow the company to buy some time. But more time for what? Is there any “there” there?
In the case of TRXC stock, I believe there is.
TRXC Stock Is a Penny Stock
Despite a surge above $6 in early February, TransEnterix fell into the penny stock range in late 2019 and it stayed there for much of last year. And the reality is that many penny stocks carry a low price for a reason.
In the case of TransEnterix, the company operates in the field of robotic surgery. This is a sector that holds a lot of promise. Case in point, the recognized leader in robotic surgery, Intuitive Surgical (NASDAQ:ISRG), has seen its share price climb 287% in the last five years. And with the exception of the share price dip caused by the onset of the pandemic (an event that affected most stocks), ISRG stock has been on a steady upward trajectory.
The same can’t be said for TRXC stock. The last five years has been a rollercoaster ride for its share price. But with the Senhance Surgical System officially launched, that narrative may be about to change.
Carving Out a Niche
Many hospitals were forced to cancel or postpone robotic surgeries due to a high census of Covid-19 patients. TransEnterix was forced to rely on secondary stock offerings to raise cash. That’s fairly typical of penny stocks. And many never break that cycle.
But TransEnterix looks like it could be an exception. Although 2021 may still have some obstacles, it’s likely to be a much better year for elective surgeries in general, and it should provide a boost for companies that focus on robotic surgeries.
I’d encourage you to read what my InvestorPlace colleague, Muslim Farooque wrote about the key differences between the Senhance Surgical System and Intuitive Surgical’s Da Vinci surgical system. The Senhance system is currently only approved for use in specific kinds of surgeries. But, as Alex Sirois noted, the FDA may approve the system for use in general surgery this year.
More surgeries being performed, competitive product advantages, and the possibility to extend the company’s addressable market are all good reasons to believe the narrative for TRXC stock may be ready to move higher.
Wait For Earnings
Investors looking to get in on TRXC stock should pay close attention to the company’s revenue picture. The company is scheduled to report earnings in March. If revenue disappoints, it doesn’t necessarily change the outlook for the stock, but it could affect its short-term fortunes.
Penny stocks are notoriously volatile. And some never reward investors’ patience. If you’re looking to take a spin in this sector, TransEnterix gives you a stock with a story. That’s a great combination.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.