When stock prices fall, it is often a sign of renewed investor interest. After all, low stock prices offer a chance to stick to old market advice, âbuy low and sell highâ. What investors need is a way to determine the underlying reasons for a stock price decline, whether that bodes well for the stock or not.
One of the best market signals comes from corporate insiders, corporate executives in positions of high responsibility – to their boards, peers, shareholders and clients. – to generate maximum returns. Their main goal is to keep the business healthy, and their positions give them access to knowledge that the general public simply does not have. And this knowledge will inform their business decisions when trading their company’s stocks.
Investors should stay on the lookout for inside information transactions, both buy and sell, especially when the stock looks depressed. Just because a company’s stock price has gone down doesn’t mean the stock isn’t healthy or should be avoided as an investment – and insiders are the ones. better placed to know. for sure. So when retail investors see insiders buying large stocks that are trading low, this is a signal to heed.
We will listen to this signal. Using TipRanks Insiders’ Hot Stocks tool, we looked for two stocks that exhibited the combination of a falling price, strong buy consensus from the analyst community, upside potential. important and recent informative insider buys. Here are the details.
Remitly Global (TO COUNT)
Let’s first take a look at Remitly Global, a financial services company specializing in facilitating international transfer payments. Remitly provides security for both sender and receiver, enabling safe and accurate transactions. This is a critical niche in a global economy where international remittances from immigrants and migrant workers are big business. Remitly bases its operations on a mobile app, allowing users to transact through a smartphone for lower fees than those offered by banks.
Remitly went public in late September, with an IPO that saw 12 million shares hit the market at $ 43 each, slightly above the initial expected price range of $ 38 to $ 42. The company raised nearly $ 523 million in gross capital and appeared ready. leap forward – but the stock has since fallen about 60%.
The share price decline came even as the company reported strong results in its first public quarterly financial report. Revenue increased 69% year-over-year to $ 121.2 million, growth that was driven by the increase in customer base and average revenue per customer. On the former, Remitly saw its active customers grow 51% year-over-year to 2.6 million, and on the latter, customers are spending more through the app. Remitly said average revenue per customer was up 12% from the quarter a year earlier. The volume of funds sent through the system increased 61% to $ 5.2 billion for the quarter.
On the negative side, Remitly is the newcomer to the remittance business, and although its mobile app is new, it faces an uphill battle against established players like Western Union and MoneyGram. These companies have known notoriety and considerable advantages in terms of market share; their weakness is an addiction to in-person services, a drawback of the âcorona eraâ that Remitly’s mobile app bypasses.
Regarding insider trading, sentiment is positive, driven by two executives who have made major and recent purchases. The first, William Kazuo Bryant, sits on the board of directors and in two purchases this month, he bought 12,800 shares, spending more than $ 245,000 on shares. The second buyer was Matthew Oppenheimer, President and CEO of Remitly. He spent $ 244,470 on 13,750 shares of the company.
The stock caught the attention of JPMorgan 5-star analyst Tien-tsin Huang, who said of RELY: âWe believe stocks are oversold and misunderstood. We view RELY as 30% sustainable revenue growth by providing digital remittances to immigrants, taking part in old vendors in a strong position in terms of price and customer confidence, with potential to increase new ones products. and partners (including crypto).
Huang’s comments confirm his overweight (i.e. buy) rating, and he sets a price target of $ 57, which implies an impressive 189% hike for the next 12 months. (To look at Huang’s background, Click here)
It is clear that Wall Street did not panic over RELY shares and agrees with JPMorgan’s point of view – the share has 8 recent reviews, and they are all positive, giving a unanimous consensus rating of d strong buy. The average price target of $ 47 suggests a 139% year-over-year increase from the current price of $ 19.66. (See the analysis of RELY stocks on TipRanks)
Health Equity (HQY)
Next is HealthEquity, a leader in the administration of health savings accounts. This company has an IRS designation as a non-bank health savings trustee, which makes it eligible to operate health savings accounts regardless of the institution in which the funds are deposited. Healthcare is a growing sector of the economy, and health savings accounts are an increasingly popular way of escrowing funds to cover costs, giving HealthEquity a solid niche for the business. The company works with employers, health plans, and benefit advisors to create savings programs for end users.
HealthEquity shares fell sharply after the December 6 release of 3Q22 results. The stock is now down 52% from its high in late January. At first glance, this may raise questions as the company has met its profit expectations. At 35 cents, EPS was on target even though it was down 14% year on year.
The real successes have come from income and forecasting. At the top of the line, the company said $ 180 million; it is essentially stable compared to the quarter of the previous year. Worse yet, revenues exceeded expectations by over $ 5 million.
Regarding the forecast, management has reduced both the revenue and profit estimates. At the high-end, the company predicts revenue for fiscal 2022 will be between $ 750 million and $ 755 million, a reduction of $ 7.5 million midway through. On the earnings side, the company lowered the forecast from $ 1.45 to $ 1.50 to a range of $ 1.30 to $ 1.35, a median drop of 15 cents per share.
The cuts scared investors off, causing a selloff that saw the stock drop 24% in one day.
Company executives, however, are willing to stick with HQY. Over the past 13 days, no less than three directors and the CEO of the company have made meaningful and informative purchases of HQY shares.
Starting with the directors. Stuart Parker bought 25,000 shares, paying $ 1.07 million and increasing his stake to $ 1.23 million. Adrian Dillon spent more than $ 500,000 on 12,375 shares, bringing his stake to $ 1.78 million. And Evelyn Dilsaver bought 5,018 shares for just over $ 199,000. His stake in the business now exceeds $ 990,000. The largest purchase, however, came from Jon Kessler, President and CEO. He bought 100,000 shares for $ 1.4 million and now owns a total of $ 14.3 million in company stock. Together, these purchases put insider sentiment at HQY strongly positive.
RBC analyst Sean Dodge keeps the tension even, saying: âThe forecast downgrade has probably surprised most people; However, the strength of the core HSA activity appears to continue through the end of the yearâ¦ all pressures impacting the guide came from the CBD side of the activity, and therefore should be transientâ¦ To longer term we remain bullish and I believe the unmatched scale / scale of the business will position it to capture more share in a market with substantial growth prospects ahead. “
Dodge sees HQY recover in the coming months and rates the stock to outperform (i.e. buy), with a price target of $ 70. Investors should see a gain of around 60% if the target is met within the next 12 months. (To view Dodge’s record, Click here)
Overall, this stock receives a firm seal of approval from Wall Street, with a strong buy consensus based on 8 buys versus 2 takes. The stock is selling for $ 43.87, and the average price target of $ 63.67 indicates an upside margin of around 45% over the coming year. (See HQY stock forecast on TipRanks)
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Warning: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.