We have some aggressive corrective action hitting today. The DJIA has already bounced back a bit, but most of the rest of the market is gaining traction to the downside. Breadth is around 3 to 1 negative, and it is mainly Nasdaq and Nasdaq 100 names that are suffering the brunt of the damage.
As I've discussed, many small-caps and growth names are already very deep into bear markets. The big issue is whether they can bounce while the senior indices correct. No one knows the answer to that, but I'm watching very carefully for better price action in the small-cap and growth stocks that I favor.
A good example of a name that I want to buy is HyreCar (HYRE) . HYRE has held up much better than most small-caps, which suggests that it can break higher once the pressure on the broader market relents.
HYRE was my 'Stock of the Week' back on February 16. It is trading around the same level it was back then, but conditions for its business have improved nicely.
HYRE is an innovative car-sharing platform that allows car owners to rent their cars to local rideshare drivers, food delivery drivers, or other services. HYRE provides insurance and helps to match the right car to the right driver. While the service has worked well and there was 84% year over year revenue growth in the third quarter, the biggest problem is that there is not a sufficient supply of cars.
HYRE took a major step in dealing with this lack of supply recently when it entered into a partnership with AmeriDrive to dramatically boost the number of cars on the HYRE platform. AmeriDrive provides 'car subscriptions' that are an alternative to standard leasing and is experienced in fleet management. Analysts at Maxim believe that HYRE will increase 'average active rentals' to about 9,000 per day from around 2,800. The analyst at Lake Street called the partnership 'transformational'. Ladenburg said that HYRE is 'clearly an emerging leader' in the mobility-as-a-service market.
In recent months car rental agencies have experienced a shortage of cars and used car prices are up over 50% in the past year. HYRE is able to raise the prices it pays drivers and also allows people to turn their automobiles into a revenue-generating assets without selling them.
Current target prices on the stock are Maxim at $18, Lake Street at $19, and Ladenburg at $17.
Earnings are due in the next couple of weeks, and I'm looking for a breakout through the $14 level in anticipation of the report. Not much has worked well in small-caps lately, but the setup and theme here are attractive.