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Corporate Insiders Are Snapping Up These 3 Stocks

Corporate Insiders Are Snapping Up These 3 Stocks

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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.

The post Corporate Insiders Are Snapping Up These 3 Stocks appeared first on TipRanks Financial Blog.

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Does the Alphabet share price make it a no-brainer investment?

The Alphabet share price is down 32.09% so far this year knocking around $618 billion off the Google-owner’s market capitalisation. The drop…
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The Alphabet share price is down 32.09% so far this year knocking around $618 billion off the Google-owner’s market capitalisation. The drop in Alphabet’s valuation can be seen as the result of two main factors. The first is that this year’s decline is at least partly a natural correction after Big Tech valuations went into melt-up during the pandemic.

The second influence has been a slowdown in revenue growth to its slowest rate since 2013 (6%), excepting a brief period during the pandemic, and concerns over the financial impact of a global recession on digital advertising revenues.

However, at the current share price of $98.46, there is a strong feeling Alphabet has been heavily oversold despite recent gains. That also appears to be a growing feeling among fund managers, who have catalysed the recent rally by buying up swathes of Alphabet stock in recent weeks.

An article by the financial markets and funds data company Morningstar this week ranked Alphabet at the top of a table of “high conviction purchases” by tracked investment managers. Managers 17 funds tracked by Morningstar have made what the data company defines as purchases of Alphabet stock that represents a meaningful addition to their portfolios, judged by the size of the purchase in relation to the portfolio’s size.

The second most popular stock in the table for high conviction purposes was the U.S. bank and financial services company Wells Fargo, with 5 fund managers taking on significant exposure to the company. Alphabet is also currently given a rare 5-star rating by Morningstar’s inhouse analysts, indicating they see it as having limited downside and significant upside at its current valuation.

chart

Source: Morningstar

Why is Alphabet seen by many professional stock pickers and analysts as undervalued?

Even if Alphabet is attracting investor attention at its current knock-down valuation, markets are still sceptical overall. If they weren’t, the company’s valuation would be higher. So while some fund managers have been making major recent investments in Alphabet, reflected by an 18% gain in the share price since November 3, the mainstream is yet to be fully convinced.

Is that simply because investors buying the stock now are cleverer than the wider market which is proving slow to appreciate it has oversold Alphabet? Or are those investors taking a significant risk with their glass half-full view of the company’s prospects over the near to mid-term?

Morningstar points out its analyst Ali Mogharabi estimates fair value for Alphabet shares at $160. That’s 62.5% higher than the current share price of $98, suggesting significant potential upside.

Mogharbi’s fair value estimate of an Alphabet share price of $160 is based on the strong revenue growth and cash flow generated by the company’s 80% share of the global search engine market held by Google. 85% of Alphabet’s revenue is still generated by digital advertising on Google, its associated ad platforms and YouTube.

The remaining 15% comes from a combination of sale of income generated by apps and content on Google Play, its quickly growing cloud service, licensing fees (especially for the Android mobile operating system), and hardware sales. Alphabet also has a loss-making “other bets” division that invests in future technologies and includes companies like the self-driving cars software company Waymo and life sciences company Verily.

Mogharbi expects Google’s dominant position in the search engine market to mean it will continue to see revenue and cash flow growth in future years with no obvious competition in sight. He believes future bets investments are reasonable as long as they are not to the extent they significantly compromise group-wide operating margins and profitability. Especially as there is a reasonable chance some might eventually contribute significantly to future revenues.

Waymo, which is developing an operating system for self-driving cars it hopes will mimic the success of Android for mobile devices, is expected to be a major player in a market worth tens of billions within the next ten to fifteen years.

But future bets aside, Mogharbi expects revenue growth from digital ad sales to maintain average annual double-digit growth for the next five years as mobile usage increases, even taking into consideration the potential for a slowdown next year as recession hurts global economies. He also sees video-content platform YouTube as contributing more to the top and bottom lines over the next few years despite the recent deceleration of its revenue growth.

And the Google Cloud Platform (GCP) is put forward as a strong business that will become increasingly important as it continues to grow. Revenue was up 38% year-on-year to $6.9 billion in Q3 and unlike its two larger competitors, Amazon Web Services and Microsoft’s Azure, Google Cloud is still losing money.

GCP should move into profitability in the medium term, the operating margin has recently shrunk from -14% to -10%, which would boost the group’s value. It is unlikely to ever be as big as AWS or Azure but could still be a major contributor to the bottom line within the next 5-10 years.

Alphabet is also responding to calls from activist investors to tighten its belt by reducing spend on future bets as well as staff numbers and remuneration levels. That should improve margins again and see the company emerge leaner from the current economic slowdown.

The company is also still a cash machine, which is facilitating a strong share buyback policy. Over the last year, the company has repurchased 433 million shares, spending $43.9 billion over the last nine months. Those repurchases reduced its share count by 3.2%, and with the stock price down and $116 billion in cash and equivalents on the balance sheet, the company could get more aggressive with the repurchases, which will help increase earnings per share.

That would be expected to put Alphabet in a very strong position to see its valuation rebound quickly when the cyclical market for online ads turns positive again.

The Alphabet share price also simply looks incredibly good value at its current level. On a trailing basis, it is trading at a price-to-earnings ratio of just 19.5. That’s even lower than the average 20.5 across the broad S&P 500 index which, based on Alphabet’s continued profitability, remaining growth potential, market dominance and balance sheet, just seems strange.

Risks to Alphabet share price upside

The main short term risk to the Alphabet share price is the potential depth of the global recession most economists agreed we have already entered. If the economic slowdown around the world proves more severe than expected and digital ad spend drops more as a result, markets could foreseeably punish Alphabet again and drag its value down.

Longer term, the company is still heavily reliant on digital advertising revenues and it will be a long time before that might realistically change. While some of the company’s future bets, especially Waymo, look very promising, there is still growth potential in the online marketing sector and existing businesses like Google Cloud Platform should make a much bigger contribution over future years, it is hard to deny Alphabet has a lot of its eggs in one basket. That does have to be seen as a risk.

However, overall, while the year ahead poses some downside risks, it does seem hard to imagine the Alphabet share price not rising significantly from current levels over the years ahead. At under $100, the Alphabet share price has a lot going for it.

The post Does the Alphabet share price make it a no-brainer investment? first appeared on Trading and Investment News.

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License Plates Could Be Printed On McDonald’s Bags To Stop Littering

License Plates Could Be Printed On McDonald’s Bags To Stop Littering

There’s been talk about McDonald’s in southwest Great Britain could print…

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License Plates Could Be Printed On McDonald's Bags To Stop Littering

There's been talk about McDonald's in southwest Great Britain could print car license plates on drive-thru bags to prevent customers from littering. 

"It's not clear exactly how the number plate would be printed on packaging, but it could be scanned onto the brown bags that contain the food," Daily Mail noted. 

Chris Howell, Swansea Council's head of waste, parks and cleansing, told a climate change corporate delivery committee meeting: 

"The Welsh Government has explored with McDonald's, or their franchises, whether or not they could print number plates of cars collecting takeaways from their drive-throughs with a view that that would discourage people from discarding their materials (litter)."

Howell said one of the biggest hurdles with fast-food companies is that if one chain adopts the climate initiative, customers will go to competitors that don't print license plates on bags. 

"If McDonald's do it, then people will just go to Burger King instead of McDonald's, because nobody wants to have their private details printed on that packaging." He added: "I think it's a really good idea but at the minute it's fraught with some difficulties." 

The nationalist political party in Wales, Plaid Cymru, first proposed the idea more than two years ago during the pandemic lockdown when party leaders noticed a spike in fast-food trash along city streets and highways. 

Welsh Government spokesperson told MailOnline:

"There are no current plans to introduce a requirement for drive-through restaurants to add vehicle registration details to fast food drive-through packaging.

"We are continuing to support Keep Wales Tidy with other initiatives to tackle roadside litter including their No Regrets campaign and their Adopt a Highway initiative."

Now 'the cat is out of the bag'. It's only a matter of time before governments start forcing fast-food companies to print license plate numbers on drive-thru bags. The dangers of this could be more surveillance, and who knows what corporations would do with license plate data if such a system were implemented. 

Tyler Durden Sat, 11/26/2022 - 18:00

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Energy is the master resource but it could be Bitcoin that reigns supreme

Nothing shines a light on the importance of energy as much as a fast-approaching winter.
The post Energy is the master resource but it could be Bitcoin…

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Nothing shines a light on the importance of energy as much as a fast-approaching winter. When the temperature drops, the scarcity of energy becomes obvious and global efforts to preserve it begin.

This year, the fight for energy is more aggressive than it’s ever been.

The fiscal and monetary policies set in place during the COVID-19 pandemic caused dangerous inflation in almost every country in the world. The quantitative easing that set out to curb the consequences of the pandemic resulted in a historically unprecedented increase in the M2 money supply. This decision diluted the purchasing power and led to an increase in energy prices, sparking a crisis that is set to culminate this winter.

CryptoSlate analysis showed that the E.U. will most likely be the one hit the hardest by the energy crisis.

The European Central Bank (ECB) has been struggling to keep core inflation down this year. The Core Consumer Price Index (CPI) began to increase substantially in 2021 due to the pandemic both in the U.S. and the E.U.

The U.S. has seen its Core CPI decrease sharply since its culmination in February and posted better-than-expected results last month. However, Core CPI in the Eurozone has continued to increase throughout the year and currently shows no sign of stopping.

Graph showing the Core CPI in the U.S. and the Eurozone from 2017 to 2022 (Source: The Daily Shot)

A similar increase in Core CPI can also be seen in Japan and the U.K. One of the factors that may have contributed to their monetary instability is a lack of investment and support for commodities like oil and gas. Widespread efforts to switch to renewable sources of energy led to a decrease in oil and gas purchases in the E.U. and the U.K.

In contrast, the U.S. and Russia have been investing heavily in oil and gas and promoting innovation in the field.

Looking at the value of fiat currencies against the U.S. dollar further confirms this impact.

The Russian Ruble and the DXY have both increased in value in the past two years, while the euro, British Pound, and Japanese Yen have all seen their Dollar value decrease.

global fiat currencies
Graph showing DXY, GBP, EUR, JPY, and RUB and their value against the U.S. dollar (Source: TradingView)

With rising inflation and a seriously weakened currency, the E.U. will have a hard time competing for oil and gas on the global market. Natural gas producers warned that almost all long-term contracts for natural gas coming out of the U.S. have been sold out until 2026. Until then, when a new wave of natural gas supply is expected to come, the E.U. will have to compete with Asia for the limited supply and swallow the high gas price.

All of this uncertainty could have a positive effect on Bitcoin. While the broader crypto market struggles to remain afloat after the FTX fallout, Bitcoin has positioned itself as a pillar of stability in a market plagued with bad actors. Devalued fiat currencies could push retail investors away from safe-haven assets like gold and commodities and towards an asset like Bitcoin.

The post Energy is the master resource but it could be Bitcoin that reigns supreme appeared first on CryptoSlate.

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