Making sense of the markets is the overriding task for investors, at all times, but in today’s environment it’s more urgent than ever. It’s not so much the downward trend on Wall Street, with the S&P 500 down 19% year-to-date, but the whirl of conflicting headwinds that make up the background. The June jobs numbers were described as strong – a positive factor – but inflation remains intractably high, and the Federal Reserve, to combat inflation, has switched its policy to increasing interest rates – which brings with it recessionary pressures. GDP contracted in Q1 of this year, and economists are debating whether or not the same happened in Q2; if it did, it would mean that a recession is already on us.
All in all, it’s not an easy economic picture to understand, and that makes picking the right investments both more difficult and more important.
But there are ways to cut through the confusion. Retail investors can find and follow the experts –Wall Street analysts, legendary investors, or corporate insiders – whose positions and knowledge give them a better line on the ins and outs of stock performance.
Of these experts, the insiders are probably the least well understood, but also possibly the best to follow. They are upper-level company officers and their positions give them two attributes that always impact trading. First, they know the inner workings of their company, and second, they are responsible for results. They don’t trade their own shares lightly, and when they do trade them, especially in bulk, investors should take note.
With this in mind, we’ve opened up the TipRanks database to pull the latest scoop on two stocks that are showing recent signs of strong insider buys, purchases that support the bullish thesis in a bearish time. Let’s dive in.
NextEra Energy (NEE)
We’ll start in the energy sector, with NextEra Energy, a leader among the world’s electric utilities. Based in Juno Beach, Florida, NextEra boasts a combination of high current capacity and huge expansion plans. The company has approximately 45,500 megawatts capacity of current power generation, and is planning new infrastructure projects for this year to total some $50 billion. The new projects combine both power generation and transmission and NextEra’s commitment to reaching a net-zero in carbon emissions by 2045.
A quick review will show where NextEra currently stands. The company posted solid revenues in 1Q22, up 14% year-over-year at $281 million, although the net income and EPS numbers declined from the year-ago quarter. Net income dropped from $202 million to $144 million; EPS came in at $1.72 compared to $2.66 last year.
NextEra reported growth in its cash holdings, which were up 48% y/y and reached $168 million, and was able to maintain its reliable – and steadily rising – dividend payment. The company has bumped that payment up three times over the past three years, and the current common share payment stands at 73.3 cents, or $2.93 annualized. At this rate, the dividend is yielding a 3.6%.
Turning to the insiders, we find that sentiment has swung positive on the stock. John Ketchum, President and CEO of NextEra, made the most recent large insider purchase, of 12,909 shares, spending approximately $1.01 million to pick up the stock.
He definitely not the only bull on this utility, though. Wells Fargo analyst Neil Kalton writes of NextEra: “The outlook for renewables has never been brighter and NEE’s competitive position never stronger… We are attracted to NEE’s strong EPS growth outlook, which is being driven by both regulated infrastructure investment at the FL utilities and non-regulated renewables development throughout the U.S.”
Kalton doesn’t stop with his upbeat commentary. He rates NEE shares an Overweight (i.e. Buy), with a $107 price target that implies a one-year upside potential of 33%. (To watch Kalton’s track record, click here)
Pulling back to a larger view, we find that the analysts are basically upbeat on NEE. The stock’s Moderate Buy consensus rating is based on 14 recent reviews that include 10 Buys and 4 Holds. The shares are selling for $80.68 and their $90.93 average price target implies a one-year upside of ~13%. (See NEE stock forecast on TipRanks)
Quotient, Ltd. (QTNT)
The second ‘insider pick’ we’ll look at is Quotient, a medical tech firm specializing in diagnostics. Quotient is at the commercial stage, and is beginning to market immunohematology products to blood banks and hospitals. Quotient’s products include its proprietary MosaiQ platform, as well as conventional reagents, under the Alba name, marketed to equipment manufacturers and laboratories.
Last month, Quotient made several announcements of interest to investors. On June 8, the company made public a new agreement with Theradiag under which the two will partner to develop new autoimmune disease diagnostics. The partnership will include technological and clinical applications.
Later in the month, the company announced its results for Q4 of fiscal year 2022. The top line revenue came to $9.8 million for the quarter and $38.5 million for the year. Quarterly revenue was roughly flat, while the full-year result was down some 11%. The company’s quarterly net loss moderated by 5.6% even as the full-year loss deepened by 20% to $103.8 million.
Towards the end of June, Quotient announced the closing of an underwritten offering of common stock shares and prefunded warrants. The offering, of 32.45 million shares and 34.21 million warrants, raised gross proceeds of $20 million, from which Quotient realized $18.5 million in net capital.
And this brings us to the insider purchases. Two company Directors, John Wilkerson and Zubeen Shroff made ‘informative’ buys of QTNT stock during the recent sale. Each Director picked up 4,666,666 shares, and each spend a total of $1.4 million on the purchases.
Coming at Quotient from the analyst side, BTIG’s Mark Massaro writes: “We believe Quotient has a catalyst-rich year ahead including an opportunity to convert several of the ~20 potential EU tenders, obtain an expanded microarray regulatory submission in 2H CY2022, and advance pipeline development with its new partner, Theradiag, for autoimmune disease indications… We also believe given consolidation in the transfusion diagnostic market, QTNT could represent a logical acquisition target as they begin to gain commercial traction.”
Quantifying his stance, Massaro gives QTNT a Buy rating with a $1.50 price target that suggests a robust 12-month gain of 436% from current levels. (To watch Massaro’s track record, click here)
This stock is one of the market’s true ‘pennies,’ trading for less than $1 per share. The current price, of 28 cents, comes with an average target of $2, implying a 615% one-year gain. The shares have recent reviews from 3 analysts, who give QTNT 2 Buys and 1 Hold, for a Moderate Buy consensus view. (See QTNT stock forecast on TipRanks)
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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.