Every stock flashes signs for investors, signals to buy now, or sell this off, or keep this in your portfolio. A savvy investor will know how to interpret these signals, to get the most from his investment budget.
Two of the brighter signs out there to follow are given by corporate insiders and Wall Street analysts. The insiders are company officers, those ‘in the know,’ with access to knowledge and data that the rest of us might have to wait months to see – and they’ll make their own stock purchases based on that insider position. The Wall Street analysts are brilliant people, as Warren Buffett once said. Besides being "better at math," they provide stock ratings and commentaries, adding a quantitative aura to their opinions.
Both insider signals and Wall Street reviews can point investors toward solid stock buys – but when these two signals agree, it’s a great flashing sign. The combination – insider activity detailing informative purchases and professional analysts tagging stocks for growth – should alert investors to their own purchase opportunities.
TipRanks collects that insider trading data, and puts it in the context of the larger markets. The Insiders’ Hot Stocks tool lets you follow the insiders, sorting the data by stock or by trading strategy. It’s a smart way to get an inside track, and to demonstrate, we’ve picked three stocks that have recently skewed strongly positive on the strength of insider trades.
Reynolds Consumer Products (REYN)
Starting in the consumer products sectors, the first stock on our list is one most people are probably – albeit unconsciously – familiar with. Reynolds’ products are both easily recognizable and quite common – in fact, the company’s plastic cling wrap, food storage containers, and aluminum foil and pans, and Hefty brand garbage bags are probably in your kitchen cabinets right now. Reynolds has built up a solid niche in the home necessities segment of consumer goods.
Earlier this month, Reynolds’ share price fell 8.5% after the release of Q2 earnings – despite a year-over-year growth in revenues and net income. Revenues hit $822 million, up 3.9% yoy, and net income grew from $55 million to $112 million.
Since the earnings report came out, two insiders have made large purchases. Vice President & Corporate Controller Chris Mayrhofer laid out almost $294,000 to buy 9,000 shares, while board member Richard Noll bought 15,000 shares for over $501,000. The two purchases swung insider sentiment on this stock strongly positive.
From the Wall Street analyst corps, JPMorgan’s analyst Andrea Teixeira rates the stock an Overweight (i.e. Buy), and sets a $17 price target that implies a 13% upside from current levels. (To watch Teixeira’s track record, click here.)
In her comments, Teixeira described the low price after the earnings release an ‘attractive entry point, and wrote, "The company has increased throughput and is gradually increasing capacity which is an indication that the company will continue to benefit from more at-home cooking under the "new normal" long term based on consumer surveys [...] "REYN remains a defensive holding (50/50 balance between branded and private label products) in our view, and therefore, we maintain our Overweight rating."
Wall Street agrees that REYN is a buying proposition. The stock’s Strong Buy analyst consensus rating is based on 4 Buys and a single Hold, while the average price target of $37.60 suggests 12% room for upside growth. (See Reynolds’ stock analysis on TipRanks)
Upland Software (UPLD)
Next on our list, Upland Software, is a tech company. This company has found its place creating software solutions for common business concerns, such as customer experience management, contact center administration, document automation and security, and project management. Upland has developed a reputation for expanding by acquisition, co-opting competing companies and adding their products to its own software lineup.
On the insider front, David May, of the company Board of Directors, recently purchased a $337,000 block of shares. His move was the first informative transaction in several months, and added 10,000 shares to his existing holdings.
Covering the stock on Wall Street, Scott Berg, a 5-star analyst ranked #49 overall by TipRanks, sees Upland as one of the few winners in the corona crisis. He writes, “We believe COVID-19 accelerated demand for Upland's product suites given the easy implementation and fast time to value... Upland remains our top pick into year-end as we anticipate greater gains in EBITDA to FCF conversion, but even more important, we believe strong execution can lead to sustained gains in organic growth…”
Berg rates the stock a Buy, and his $53 price target indicates room for $55 growth this year. (To watch Berg’s track record, click here)
Upland’s Strong Buy rating from the analyst consensus is unanimous. 5 reviewers have given UPLD shares a thumbs up recently. Those shares are selling for $33.91, and the average target, at $49.20 suggests a 45% upside potential. (See Upland’s stock analysis on TipRanks)
Quest Resource Holding (QRHC)
Last on our list today is Quest Resource, a holding company whose subsidiaries offer services in the waste management industry. Quest’s services focus on waste recycling and management, with programs for the reuse and recycling of automotive products like motor oil, old tires, and scrap parts; commercial kitchen waste, like expired foods and used grease and cooking oils; and HASMATs, like batteries, construction debris, mercury, and medical waste.
Quest saw a share price surge in the runup to the Q2 earnings release, with the stock gaining 52% in the week prior to earnings day. The Q2 results, including $22 million in revenues and 8 cents EPS profit against the 6-cent loss expected, vindicated the share gains.
During that week, Quest conducted a common stock offering, putting 2.95 million shares on the market. The offering closed on August 7, after raising well over the $3.4 million expected.
The stock offering attracted at least one ‘informative’ inside purchase, from Board of Directors member Dan Friedberg. Friedberg bought up 655,000 shares for over $753,000.
Turning to Wall Street, Amit Dayal, a 5-star analyst with H.C. Wainwright, sees Quest as well-adapted for the current ‘coronavirus environment. “We believe the Quest's customer diversification provided a cushion against a challenging economic backdrop... We believe the company's asset light model allowed it to manage its operations and cash flows relatively efficiently, with 90% of the staff working remotely, and minimal disruption to customer service.”
To this end, Dayal rates QRHC a Buy, and his $3.50 price target suggests the stock has room to grow an impressive 70% from the current share price of $2.00. (To watch Dayal’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.