Insiders Pour Millions Intro These 2 Beaten-Down Stocks, Analysts Say They Could Be Ready to Bounce Back — Here’s Why You Should Take Notice
In the world of stock markets, a well-known adage prevails: insiders may sell shares of their own companies for a myriad of reasons, but their decision to buy stock typically hinges on one belief – that the shares are set to rise.
By insiders, we mean the corporate officers that sit on company boards and are the in-the-know types with access to the sort of information not available to the casual investor. By law, they are required to make their purchases public, thereby keeping the playing field level and investors can use this information to their advantage.
With this in mind, we’ve opened up TipRanks’ Insiders’ Hot Stocks tool and have homed in on two names that have been getting plenty of love from the insiders recently; both have been subject to big purchases.
They might have been getting some love from C-suite members but not much appreciation from the markets in recent times – both have taken a significant beating this year. But it’s not only the insiders that believe they could make a comeback – certain Street analysts are also signing their praises. So, let’s see why these beaten-down names might be ready to bounce back.
Enphase Energy (ENPH)
We’ll start with the renewable energy sector, where Enphase Energy is a major player in the solar industry. The company is known for its innovative microinverter technology, which plays a pivotal role in solar energy systems. Unlike traditional string inverters, Enphase’s microinverters are installed on each individual solar panel, optimizing energy production, improving system reliability, and providing real-time monitoring capabilities. This technology allows homeowners and businesses to maximize the efficiency of their solar installations while ensuring system resilience, even in the face of shading or panel malfunctions.
Enphase Energy has grown into a global leader in solar solutions, with a presence in multiple countries. That said, recent times have not been all smooth sailing. The company delivered a mixed Q2 report, accompanied by a disappointing outlook.
While revenue climbed 34.1% year-over-year to $711.12 million, the figure fell short of the consensus estimate by $14.86 million. On the other hand, EPS of $1.47 beat the forecast by $0.20. The real problem, however, was with the guide. The company sees Q3 revenue hitting the range between $555-$600 million, way off the $749 million expected on Wall Street.
Shares have been in a constant downtrend since the July print, and the overall result is a stock that has shed 54% year-to-date.
Turning to the insiders, one board member evidently thinks the bottom must be in sight. Director Thurman Rodgers recently bought 32,600 shares, spending over $4 million on the purchase. Rodgers’ total holdings now stand at ~95,000 shares, worth ~$11.3 million.
Rodgers is not the only one in a confident mood. Raymond James analyst Pavel Molchanov points out to investors several reasons why the stock is ripe for the picking.
“What makes Enphase stand out among the 30-plus U.S.-listed pure-plays in the solar space? The core microinverter technology is, of course, what enabled the business to grow to a level where the company joined the S&P 500 in 2021. But there are also two distinctions in a more narrowly financial sense: 1) the company is free cash flow positive and 2) the company has negative net debt. Why are we highlighting these points now? Because, after a… decline year-to-date, due to industry headwinds that were readily apparent this past earnings season, the stock is trading at its lowest forward P/E on consensus estimates – 21x – since 2020,” Molchanov opined.
Based on the above, Molchanov rates ENPH shares an Outperform (i.e., Buy), while his $225 price target suggests they will deliver growth of a strong 90% in the months ahead. (To watch Molchanov’s track record, click here)
Over the past 3 months, 24 analysts have chimed in with ENPH reviews and these break down into 17 Buys, 6 Holds, and 1 Sell, all culminating in a Moderate Buy consensus rating. Most analysts think the shares are somewhat undervalued; The $186.77 average target makes room for 12-month returns of ~57%. (See ENPH stock forecast)
Alpha Teknova (TKNO)
From solar power we’ll switch to the healthcare industry. Alpha Teknova offers life science reagents that facilitate research, the advancement of biopharma products, and molecular diagnostics. Utilizing proprietary and flexible manufacturing techniques honed over more than 25 years of activity, Alpha Teknova delivers tailor-made solutions, catering to projects of various sizes, from small-scale research endeavors to extensive commercial production, all with best-in-class turnaround times.
The company boasts a customer base exceeding 3,000, encompassing a wide spectrum of clients, including biotechnology and pharmaceutical companies, manufacturing firms, in vitro diagnostic enterprises, as well as academic and government institutions.
Against a difficult market backdrop, the company delivered a decent Q2 report. While revenue fell by 1.7% from the same period a year ago to $11.5 million, it saw a 26% sequential increase to meet Street expectations. Meanwhile, EPS of -$0.25 trumped the forecast by $0.03.
However, on account of ongoing headwinds related to macro pressures impacting earlier-stage biotech firms, the company lowered its FY23 guide from between $42-46 million to the range between $37-40 million.
Alpha Teknova shares have beaten a hasty retreat throughout most of the year, showing an overall drop of 59%. However, several insiders have now decided the time is right to pounce and have been buying shares recently. The most notable of these being a ~$1.5 million purchase made by Director Matthew Mackowski, who collected 810,810 shares for that sum.
BTIG analyst Mark Massaro acknowledges the recent headwinds but that doesn’t affect his positive thesis for the stock.
“While the guide down is not ideal, (1) it did not come as a surprise given the well chronicled broad-based macro pressures cited across our coverage in the tools space, particularly from emerging biopharma, and (2) TKNO feels good about its revised bar given a bottom up review of its existing orders,” Massaro explained. “The midpoint of the guide suggests a 1H/2H weighting of 54% vs. 46%, implying a front-end (not back-end) loaded year, unlike other tools companies, which gives us some comfort. TKNO has only recently made investments in commercial teams and next-generation lab automation, thus we think TKNO should now be able to reap the fruit of its investments.”
Summing up, Massaro further said, “Shares of TKNO trade at just 1.8x our 2024 revenue estimate, well below historical averages of ~3-7x, thus we think the stock is undervalued.”
Undervalued, indeed. Along with a Buy rating, Massaro’s $5 price target implies share appreciation of 116% in the year ahead. (To watch Massaro’s track record, click here)
Massaro is not the only analyst to see a solid upside here; 4 Buys and 1 Hold assigned in the last three months add up to a ‘Strong Buy’ consensus rating. The shares are priced at $2.09 and the $5.33 average target suggests an upside of 130% from that level. (See TKNO stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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.
