The clear upward trend in the stock markets has investors in a buying mood. The reasons are varied, and sometimes hard to pin down; while we’re still stuck in the coronavirus inspired economic doldrum, at the state and local levels economies are starting to reopen. The civil unrest of the past week is worrisome, and the destruction in urban centers is serious, but the economic blow was softened by the shutdowns. The riots would have stopped ‘normal’ activity – but that was already slowed or halted, and had been for two months. The shutdowns were already baked into market sentiment.The upshot is, there is real hope of a turnaround in 2H20. And that makes the corporate insiders a most interesting group to follow. These company officers and board members are the ones at the helm of corporate America. They’re watching the news, steering their companies, and are responsible to shareholders for corporate performance. So, when they start buying, investors should pay attention.TipRanks has a tool for that. The Insiders’ Hot Stocks shows which stocks top insiders are most active on, for both purchases and sales. You can sort insider trades by a variety of filters, including trading strategy. We’ve done some of the legwork for you, and pulled up three stocks with recent informative buy-side transactions. Here are the results.Douglas Emmett (DEI)We’ll start with a real estate investment trust. REIT’s are popular in these pages; they hold a secure niche in the financial sector, and are well-liked by income-minded investors seeking a steady dividend stream. Douglas Emmett, which owns office and apartment properties in California and Hawaii, is typical of the species. The stock was hit hard by the market drop in February and is still underperforming, standing 26% below its February peak price. That said, DEI shows several strong attractors for investors. First, of course, is the insider signal. Yesterday, Director Christopher Anderson paid $1.3 million for a bloc of 42,800 shares. This informative purchase swung the insider sentiment on DEI into positive territory.In another point of interest to investors, DEI declared its regular quarterly dividend of 28 cents per share. This payment, which annualized to $1.12, gives a yield of 3.65%. The yield is low by the standards of REITs, but is significantly higher than the 2.16% found in the financial sector generally – and it is reliable, as the company has maintained and grown the payments for the last 11 years.Covering the stock for Piper Sandler, analyst Alexander Goldfarb notes an important point that is easy to miss in the REIT landscape. He writes, “What densification? DEI's small tenant focus (~200 sf pp) has meant its users never joined the open floor plan trend many large corporates did and thus management doesn't see the same reconfiguration need as larger CBD tenants.”Goldfarb rates DEI a Buy, and sets a $35 price target that to imply 8% growth in the coming year. (To watch Goldfarb’s track record, click here)Douglas Emmett’s analyst reviews are split 5-4 between Buys and Holds, making the analyst consensus view a Moderate Buy. Shares are priced at $32.54, so the average price target of $35.56 suggests an 8% upside in the next 12 months. (See DEI stock analysis on TipRanks)Liquidity Services (LQDT)Next up is Liquidity Services, and e-commerce company. Liquidity operates a network of online auction marketplaces under seven different brand names. The company is based in Bethesda, Maryland, in the suburbs of Washington, DC, giving it quick access to one of the world’s major cities.Like many high-tech companies, LQDT has been operating at a net loss over a long term – so investors were not phased by the 10-cent EPS loss reported in Q1. That number came in better than the 12-cent loss expected. Of greater concern, the $49.5 million in top-line revenue missed the forecast by more than 8%, and slipped 8.4% year-over-year. Clearly, the economic slowdowns of the quarter impacted sales.On major insider, CEO William Angrick has made four informative purchases in the past four weeks, totaling 196,932 shares for which he disclosed over $1 million in payment. Barrington’s Gary Prestopino, rated 5-stars by TipRanks, sees LQDT as a Buy proposition. His $10 price target suggests the stock has room for 71% growth this year. (To watch Prestopino’s track record, click here)Prestopino notes, “Prior to the pandemic-related slowdown, LSI experienced strong volume in the RSCG segment from existing sellers and from the launch of new programs with both midsized and large retailers, augmented by strong buyer demand for retail goods in the Liquidation.com marketplace.”Overall, with 1 Buy and 1 Hold rating set recently, LQDT shares get a Moderate Buy from the analyst consensus. The $8 average price target suggests a healthy one-year upside potential of 37%. (See Liquidity stock analysis on TipRanks)Wrap Technologies (WRTC)The last stock on our list is particularly interesting, especially in light of recent events. Wrap Technologies inhabits the police and security niche, where it specializes in less-than-lethal restraint devices for police use. The company’s showcase product, the BolaWrap 100, is designed to halt and restrain individual subjects – without lethal force – at a range of 10 to 25 feet.The implications of such a product are obvious today. But it’s important to note that the company’s CTO, Elwood Norris, just bought $500,000 worth of stock. This netted him 100,000 shares. Norris, who is also listed as a >10% owner of the company, has a total holding valued at $56.8 million.Also of note for investors, WRTC beat the forecast on Q1 earnings. The company showed an EPS loss of 8 cents, 20% better than the 10-cent loss which had been predicted. That was reported at the end of April, and the barely budged the share performance. In the past week, however, WRTC shares have spiked sharply, jumping 61% in since May 28. Once again, the connection to current events is clear, and investors believe that less-than-lethal policing tools will see a surge in demand in the near future.Jon Hickman, of Ladenburg Thalmann, writes of Wrap Technologies, “Though the worldwide exposure to COVID-19 has caused a temporary slowdown in in-person sales-related meetings, the company's momentum from late 2019 and early in Q1 is resulting in orders and reorders from smaller agencies in the U.S… The Los Angeles PD's 90-day field trial is underway and the feedback to date has been positive.”Hickman puts a $9.75 price target on the stock, supporting his Buy rating and suggesting that WRTC has room for 16% growth this year. (To watch Hickman’s track record, click here)Like LQDT above, WRTC has just two recent analyst reviews – but both are Buys. The stock is priced at $8.44 after its recent surge in value. That share appreciation has pushed the stock price right up to the $8.38 average price target. Expect reviewers to adjust the price target higher in the near future, should police demand for non-lethal force alternatives increase due to social pressures. (See WRTC stock analysis at TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Airline stocks climbed on Thursday as American Airlines boosted its domestic flights for the summer. Yahoo Finance’s Kristin Myers and Emily McCormick discuss. “The biggest risk to Slack in our view is that the good news is ‘already out there’,” warned Canaccord Genuity analyst David Hynes in a recent client note, maintaining his “buy” rating on the stock. In Slack’s report after the bell, analysts on average expect a 39.5% jump in quarterly revenue to $188 million and a non-GAAP loss of 6 cents per share, according to Refinitiv. Slack is trading at the equivalent of 23 times its expected 12-month sales, according to Refinitiv, an unusually high level, even among other fast-growing software companies.
American Airlines Group Inc shares jumped by 25% after it said Thursday it will significantly boost its U.S. flight schedule next month after dramatic reductions caused by the coronavirus pandemic, flying more than 55% of its July 2019 domestic capacity. American shares, up 24.6% to $14.77 on the bullish announcement, are still down more than 50% since mid-February. The airline, the largest U.S. carrier, will also boost its international flights schedule next month, flying nearly 20% of its July 2019 schedule.
Yahoo Finance speaks with Nikola founder Trevor Milton as the electric- and hydrogen-powered truck maker debuts on the Nasdaq.
Diamond Hill Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Diamond Hill Small Cap Fund posted a return of -36.17% for the quarter, underperforming its benchmark, the Russell 2000 Index which returned -30.61% in the same quarter. You should check out Diamond Hill Capital's top 5 […]
While many analysts say they don’t expect stocks to fall all the way back to their lows set in March, much of Wall Street says the recent surge of nearly 40% for stocks may be setting investors up for disappointment, with rougher times likely to come. “There’s no question that it’s going to be a choppy recovery,” said Rich Weiss, chief investment officer of multi-asset strategies for American Century Investments. A little more than two thirds of fund managers say this is nothing more than a bear market rally, according to the latest monthly survey by Bank of America conducted in May.
Diamond Hill Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Diamond Hill Small Cap Fund posted a return of -36.17% for the quarter, underperforming its benchmark, the Russell 2000 Index which returned -30.61% in the same quarter. You should check out Diamond Hill Capital's top 5 […]