In this piece, we will take a look at ten stocks that are about to explode. If you want to skip our background of the stock market then take a look at 5 Stocks That Are About To Explode.
The stock market has been quite tumultuous recently. The Federal Reserve's rapid interest rate hikes that have pushed the rates to a two decade high have significantly changed today's investment dynamics and shaken up several industries. They have also made money market funds and the U.S. dollar quite attractive as well, with the greenback always eager to flex its claws at the slightest hint of more interest rate hikes.
Today's interest rate environment started shaping last year at quite an inopportune time. It came right at the time when inflation was rising in the aftermath of the coronavirus pandemic due to the lax fiscal policies of central banks all over the world. While this alone would not have shocked markets, inflation, which was already high due to the monetary policies, soared as the Russian invasion of Ukraine started and the global energy market was disrupted. Europe rushed to diversify its oil sourcing from Russia, and the sweet crude produced in Saudi Arabia became the oil of choice all over. At the same time, countries like Qatar benefited as a key component of Europe's energy diversification was choosing liquefied natural gas (LNG) to meet its energy needs.
The impact of this on the stock market was divided. On one side, growth stocks such as Apple and Meta sank as investors rushed away from companies whose revenues are tied to discretionary consumer income. However, on the other side, big and small oil companies saw both their share price and revenues soar as they benefited from the growth in demand for their products as well as record high prices.
2023, on the other hand, has been the exact opposite. Oil companies' revenue and share prices are coming back to Earth and big tech stocks are soaring. This trend reversal is due to the simple fact that inflation has started to come down and the U.S. economy has yet to enter a recession. The latter bit is particularly important since one of the biggest fears in the market last year was for a potential recession, which drove investors away from risky stocks in anticipation of a market downturn this year. However, aided by the hype surrounding artificial intelligence, U.S. stock indexes have set new records for their first half gains, and as we head toward the close of 2023, it appears that more positive news might be on the way.
The latest bit on the economic front comes in the form of the Labor Department's JOLTS report and a revision to the first second quarter's GDP figures. Overall, August has been a dour month for markets as they reversed some of their gains for the year but the close of the month provided some great news. Great, at least when the stock market is concerned. The penultimate trading day of August revealed that private payrolls as measured by the ADP National Employment Report saw 177,000 jobs added in July, which was nearly 20,000 jobs lower than consensus economist estimates. At the same time, GDP growth for the second quarter was revised downward to sit at 2.1%, which showed that the economy is taking hits from the current record high interest rates. Additionally, a crucial inflationary metric, namely the price index for purchases was revised to 1.7% from an earlier 1.9% to mark a sizeable drop from the 3.8% at which it had stood during the first quarter.
Markets, safe to say, were ecstatic. The S&P500 closed at 4,514 points on August 30th, erasing all of its losses since August 2nd to mark a small 1.6% drop over the month. This trend was also evident in the big tech NASDAQ 100 index, which had taken a beating earlier as jittery investors rushed to the dollar amidst worries that the Fed might raise interest rates soon.
This dynamic climate leaves the opportunity open for potential turnarounds in stocks that have tanked this year. However, while we are focusing on the Fed, one investor is also considering the impact of elections on the stock market. Elections! You ask? Well, these are the midterm elections of 2022, and Mr. Fisher believes that while the first nine months after the elections, which he shares always see markets rise, are over, there might be reasons to be optimistic for the short term future as well:
Election jitters will fade to a bullish tailwind.
(Another bit of good news: Over 83% of presidents’ fourth years – like 2024 – have been positive, averaging 11.4%.)
Which brings us to our secret sauce in the back half of any given administration: gridlock.
The legislative quiet that follows midterms – whether it’s the president’s enemies who have regained control of Congress, or it’s Congress getting split between two parties – zaps uncertainty around new, controversial laws that always create winners and losers.
Political squawking remains, but big bills go nowhere. Political risk aversion falls, juicing stocks.
Further, most presidents shun major legislation as re-election bids near, lest they irk large swaths of voters.
They use unaddressed issues as fundraising bait and campaign promises. Get me re-elected – then I’ll fix it! Politics 101.
Hence, after two years of mega-spending bills, this year features mainly social and foreign policy chatter. Cluster munitions, NATO negotiations, student loan plans and replans, SCOTUS hype. Important? Maybe. Headline fodder? Yes. But nothing to rattle markets. Pundits shriek. Markets shrug.
Leave it to Mr. Fisher to make politics sound not boring.
So, in this dynamic environment, are there any stocks that could surprise anyone? Well, we wagered a look and some that top this list are RE/MAX Holdings, Inc. (NYSE:RMAX), The Joint Corp. (NASDAQ:JYNT), and DISH Network Corporation (NASDAQ:DISH).
To compile our list of stocks that are about to explode, we compile stocks that are close to their 52 week low share price levels and have seen recent insider purchases. The logic behind this goes that while the market might be pessimistic about the stocks, management and big investors aren't. The firms are ranked by the growth rate in their insider transactions over the past six months.
10 Stocks That Are About To Explode
10. Safeguard Scientifics, Inc. (NASDAQ:SFE)
Change In Insider Ownership: 45.21%
52-Week Low Price: $1.09
Safeguard Scientifics, Inc. (NASDAQ:SFE) is a venture capital company that invests in technology, media, and other industries. Minority investor Thomas A. Satterfield Jr. has bought more than half a million in stock this stock since February. The lowest average price for these transactions was $1.17 while the highest price was $1.94.
As of June 2023, four out of the 910 hedge funds surveyed by Insider Monkey had bought the firm's shares. Safeguard Scientifics, Inc. (NASDAQ:SFE)'s biggest hedge fund investor is Jon Bauer's Contrarian Capital since it owns 1.1 million shares that are worth $1.9 million.
Along with The Joint Corp. (NASDAQ:JYNT), RE/MAX Holdings, Inc. (NYSE:RMAX), and DISH Network Corporation (NASDAQ:DISH), Safeguard Scientifics, Inc. (NASDAQ:SFE) is a stock that can potentially explode.
9. Bridgeline Digital, Inc. (NASDAQ:BLIN)
Change In Insider Ownership: 65.23%
52-Week Low Price: $0.87
Bridgeline Digital, Inc. (NASDAQ:BLIN) is a technology company that offers advertisers a platform to run and manage their campaigns. The firm's chief executive officer Dr. Roger Kahn has been busy buying shares this year, ranging from 90 cents a share to $1.20 a share.
By the end of Q2 2023, three out of the 910 hedge funds part of Insider Monkey's database had held a stake in Bridgeline Digital, Inc. (NASDAQ:BLIN). Out of these, the firm's largest shareholder is Jim Simons' Renaissance Technologies since it owns 94,188 shares that are worth $111,000.
8. XOMA Corporation (NASDAQ:XOMA)
Change In Insider Ownership: 69.72%
52-Week Low Price: $14.12
XOMA Corporation (NASDAQ:XOMA) is a biotechnology patent firm that acquires patents for products that can be commercialized. Its CEO and CIO have purchased close to $100,000 of shares since February 2023, at prices ranging between $17 and $24.
After digging through 910 hedge funds for their second quarter of 2023 shareholdings, Insider Monkey discovered that ten had bought the firm's shares. XOMA Corporation (NASDAQ:XOMA)'s biggest hedge fund investor is Mark Lampert's Biotechnology Value Fund / BVF Inc through a stake worth $68 million.
7. Ames National Corporation (NASDAQ:ATLO)
Change In Insider Ownership: 83.55%
52-Week Low Price: $17.51
Ames National Corporation (NASDAQ:ATLO) is a regional bank operating in Iowa. Several of its directors, its CFO and the president of a subsidiary have bought more than $100,000 worth of shares this year with the lowest average price being $17.80 and the highest price being $19.64.
As of June 2023, six out of the 910 hedge funds researched by Insider Monkey had held a stake in Ames National Corporation (NASDAQ:ATLO). Jim Simons' Renaissance Technologies is the largest stakeholder among these since it owns $1.1 million worth of shares.
6. 2seventy bio, Inc. (NASDAQ:TSVT)
Change In Insider Ownership: 105.19%
52-Week Low Price: $5.26
2seventy bio, Inc. (NASDAQ:TSVT) is a biotechnology firm developing cancer treatments. Its primary insider buyer this year is minority owner Kynam Capital, which has bought roughly $6.5 million in shares this year with low and high prices of $5.80 and $5.96, respectively.
By the end of 2023's June quarter, 20 hedge funds out of the 910 polled by Insider Monkey had invested in the firm. 2seventy bio, Inc. (NASDAQ:TSVT)'s biggest investor among these is Derrick Tang's Kynam Capital courtesy of a $49 million stake.
RE/MAX Holdings, Inc. (NYSE:RMAX), 2seventy bio, Inc. (NASDAQ:TSVT), The Joint Corp. (NASDAQ:JYNT), and DISH Network Corporation (NASDAQ:DISH) are some explosive stocks.
Disclosure: None. 10 Stocks That Are About To Explode is originally published on Insider Monkey.