These stocks are down 50% this year, but insiders are buying more
Every investor knows that the way to profits is to buy low and sell high. It is a basic precept of any economic trading system. The trick, however, is to recognize when the stock is low enough to buy. The best time to buy is when the stock bottoms out; which will maximize returns when the stock price begins to rise again.
There are a multitude of possible indices that investors can use to find the lowest price; today we’ll be looking at insider buying trends.
Insiders – corporate executives, board members and others “in the know” – don’t just run companies, they know the details. Legally, they’re not supposed to trade that knowledge, or blatantly trade it, and disclosure rules by government regulators help keep insiders honest. However, their honest stock trading can be very informative. These are the people who have the most in-depth knowledge of particular stocks. So when they are buying or selling, especially in bulk, take note.
In this case, we used TipRanks Insiders’ Hot Stocks tool to find two stocks that fell significantly in price this year – and that drop coincided with “informative buying” insider trades. Let’s take a closer look.
Matching group (MTCH)
We’ll start with Match Group, a holding company in the online dating world. Match Group owns and operates an array of dating sites, and its portfolio includes industry leaders such as Tinder, OKCupid and Plenty of Fish. Match Group introduced the swipe feature to mobile dating apps and offers its products online worldwide, in over 40 languages, for all demographics. Match Group’s Tinder brand is the most downloaded dating app on the web and the most profitable dating app in the world.
Turning to Match Group’s financial performance, we see the company saw its revenue and earnings slip from the first quarter of this year into the second quarter – although revenue remains strong year on year. other. At $795 million, total revenue was up 12% year over year, but the company posted a net loss of $10 million, or 11 cents per share, due to a one-time charge linked to the acquisition last year of the South Korean company Hyperconnect.
This acquisition, which was Match’s largest ever, brought the Azar and Hakuna brands into the Match universe and cost the holding company $1.725 billion. The transaction was carried out half in cash and half in shares.
In another large payment, which negatively impacted Match Group’s cash flow in the second quarter, the company settled a long-running lawsuit with the founders of Tinder in December. Match Group paid $441 million and effectively ended the lawsuit before the jury could resume deliberations. In addition to the lawsuit settlement, Tinder’s CEO stepped down last week and the brand’s senior management is in the midst of a change. Match Group hopes that with new leadership at the highest levels, Tinder can regain its position as the company’s revenue engine.
While Match Group has managed to expand its reach into the online dating niche, shares are down 50% so far this year. Meanwhile, Match Group CEO Jin Kim was not deterred from buying big on MTCH.
Last week, Kim bought 16,000 shares of MTCH, paying a total of $1.02 million for the stock. His total stake in the company is now valued at nearly $1.16 million. Kim took over as head of Match Group at the end of May this year.
Looking to the future, Piper Sandler analyst Matt Farrell writes, “We continue to love this name given that online dating isn’t going away, and it’s the name to own in the space. Tinder is still the most downloaded dating app in the world.
To that end, Farrell assigns MTCH an overweight (i.e. buy) position, and his price target, at $80, suggests the stock has around 21% upside potential for the year to come. come. (To see Farrell’s track record, Click here)
Wall Street, in general, seems optimistic about Match’s prospects. The stock has 17 recent analyst reviews, which break down into 14 buys and 3 holds, for a strong buy consensus rating. The shares are trading at $66.27 and their average price target of $83.56 implies a 26% upside over 12 months. (See MTCH stock forecast on TipRanks)
PROG Holdings (PRG)
The next stock we will look at is PROG Holdings, an interesting company in the lease-to-own space. PROG has three business segments, including Progressive Lending, a hire-purchase purchase option product for low-end retail customers seeking to purchase home appliances, electronics, connected mobile devices, and more. ; Vive Financial, a financing service for customers who do not qualify for prime loans; and Four Technologies, PROG’s fintech payment platform that includes buy now/pay later functionality.
At the end of last month, PROG made two important commercial announcements. The first concerned 2Q22 financial results. These had a mixture of positives and negatives. On the revenue side, revenue was down slightly year-over-year, falling about 2% to $649.4 million. At the same time, the company’s non-GAAP diluted EPS of 52 cents beat guidance of 46 cents by a margin of 13%.
The second commercial announcement concerns an agreement with Samsung. PROG Holdings’ Progressive Leasing segment, which includes app-based and in-store leasing solutions, has been selected as the exclusive leasing service provider for Samsung.com.
Overall, PROG shares are down 54% year-to-date. The drop, however, did not deter Curtis Linn Doman, of the company’s board of directors, from increasing his stake.
On August 3, Doman purchased 50,000 PRG shares, paying $962,500. Doman now owns shares of the company worth a total of $5.52 million. His buy was the largest of several insider buys last week, including two in the $20,000 to $40,000 range, as well as $283,000 buys by the company’s CEO.
As for the analyst’s comment, we’ll check with Jefferies analyst Kyle Joseph, who writes, “A perfect storm of macro factors; difficult to imagine a more difficult short-term context for the VLTO [virtual lease-to-own]. High inflation weighs on discretionary demand, especially for low-end consumers, while simultaneously weighing on credit performance, as rising gasoline, food and housing prices disproportionately impact PRG customers.
“While PRG has always been a relatively defensive name, it is beholden to the underwriting decisions of traditional credit providers further up the POS funding cascade…. At the same time, as retailers struggle in a more volatile , adding the VLTO alternative to their suite of POS funding alternatives is becoming more attractive, so we view the near-term operating environment as a challenge for PRG and the entire VLTO space. term, we still see value in stocks,” Joseph continued.
Along with these comments, Joseph gives PRG a Buy rating, and his price target of $36 implies a 71% one-year gain for the stock. (To see Joseph’s background, Click here)
This stock has received modest analyst attention – a total of 3 analyst reviews, with 2 to buy and 1 to hold, for a moderate buy consensus. The stock’s average price target is $36, which matches Joseph’s above and indicates a 75% upside from the current price of $20.53. (See PRG stock forecast on TipRanks)
To find great stock trading ideas at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock information.
Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.