Recent market volatility is enough to make your head spin, and can cause plenty of confusion for retail investors seeking a solid market strategy. It’s tempting to look to the experts, but that raises another question: which experts are the best to follow?
Following the insiders, the corporate officers who live and breathe with an inside view of the stock’s deeper workings, is one of the viable strategies for finding stock market bargains. Insiders don’t trade lightly – they usually have deep personal stakes in their company’s fortunes, and so, when they make bulk trades in their own stock, investors should pay close attention.
Investors can look to these moves, using TipRanks’ Insiders Hot Stocks tool. We’ve used that tool to do just that, find a couple of stocks whose price has dropped recently – and that drop has coincided with some ‘informative buy’ insider trades. Let’s take a closer look.
Hims & Hers Health (HIMS)
The increasing prevalence of digital connections has combined with increased demand for medical services to create the telehealth industry as the connection between the two. Him & Hers is a healthcare company in the telehealth niche, offering customers access to licensed medical professionals, prescription drugs, and recommendations for over-the-counter medications through online connections. The company’s best known products are generic medications for sexual dysfunction, along with OTC treatments for men’s and women’s hair loss.
This company has been making moves to expand and improve its offered services. At the end of November, Him & Hers announced a partnership with Uber to make on-demand delivery available for most of the company’s personal care products in major urban areas across the US. Customers can access the service through the Uber Eats app. And, in mid-December, the company announced a major expansion of its Medical Advisory board, a move that will facilitate the expansion of services into the mental health and primary care verticals.
The Q3 financial results show the growth potential of the telehealth niche. Him & Hers reported quarterly revenue of $74.2 million, up 79% year-over-year, a result that beat the Street’s expectations. The solid revenue growth was driven by a 95% yoy increase in subscriptions, to a total of 551,000. In light of these results, the company revised its full-year revenue guidance upwards, to the $263 million to $265 million range. This represents an increase of $9 million at the midpoint.
Despite the sound results reported, HIMS shares are significantly down this year. The shares peaked in February, and have lost 73% since then.
The drop in share price has not discouraged Andrew Dudum, the founder and CEO of Hims & Hers, from increasing his holding. On December 13, Dudum bought 81,100 shares, paying $480,000.
The company CEO is not the only fan here. In coverage for Piper Sandler, 5-star analyst Sean Wieland writes: “FY21 revenue is now projected to grow 77% y/y, at the midpoint, and HIMS endorsed a 30% baseline growth rate for FY22, which is ~2x what we had been modeling… HIMS is dominating the cash-pay, low-to-mid acuity DTC markets for sexual health, dermatology and hair loss. The company is executing consistently and with strategic acuity…. we think the stock is undervalued.”
In line with these comments, Wieland gives HIMS an Overweight (i.e. Buy) rating, with a price target of $12 that implies an 86% upside for the coming year. (To watch Wieland’s track record, click here)
Overall, with 2 Buy ratings and 1 Hold assigned in the last three months, the word on the Street is that HIMS is a Moderate Buy. Not to mention the $10.67 average price target brings the upside potential to ~66%. (See HIMS stock forecast on TipRanks)
Joby Aviation (JOBY)
Now let’s get speculative. New companies are always popping up, offering new technologies or techniques, or some new twist on something old. Joby Aviation does both, as it works to develop and commercialize a fascinating concept. The company is working on electrically powered vertical takeoff and landing (eVTOL) aircraft. The California-based company’s stated goal is to produce a commercially viable urban air taxi. Joby has produced several remotely operated drones to demonstrate the technology, and has worked in collaboration with NASA. A full-sized prototype is under testing, and is expected to receive its type certification in 2023.
Joby’s aircraft concept features eight electrically powered tilt-rotor propeller engines arrayed on the leading edges of the wings and tail. The design is intended to optimize efficiency and help promote the shift away from fossil fuel-powered vehicles. The concept aircraft under development will carry a pilot and have room for four passengers plus luggage. A single full battery charge will allow a range of 150 miles at speeds up to 200 mph.
In August of this year, Joby entered the public markets through a SPAC transaction with Reinvent Technology Partners. The SPAC deal brought Joby more than $1 billion. Since then, however, the stock turned south and is now off 48% from its peak.
The company has no revenue stream as yet, but did report meeting several important milestones in Q3. Among these were a 154 mile flight of the production prototype, the longest flight by an eVTOL aircraft, and the conduct of acoustic testing with NASA, as part of a program that evaluated the electric aircraft’s noise profile. The latter is an important part of certifying the plane to fly in urban areas.
On the insider front, Joby saw a few informative buys this week. JoeBen Bevirt, CEO and founder, bought 85,000 shares for $792,860, while Paul Sciarra, of the Board of Directors, spent over $1.47 million to buy 229,500 shares of the company.
JPMorgan analyst Kristine Liwag is also a fan of JOBY. She rates the stock an Overweight (i.e. Buy) and sets a $16 price target, indicating confidence in a robust 129% upside for the next 12 months. (To watch Liwag’s track record, click here)
Explaining her bullish stance, Liwag says, “The main goal we are focused on is the certification of the Joby aircraft as the FAA begins confirmatory testing of some parts which will be used on the aircraft… The company now has ~$1.3bn in Cash and Short-term investments on the balance sheet which we see as ample capital to get the Joby aircraft certified. We view the steps Joby has taken in the quarter positively as the company made strides in manufacturing, Part 135 certification, and in-house testing of individual parts and systems of the Joby aircraft.”
Liwag is currently the only analyst following JOBY. It will be interesting to see whether other analysts follow in Liwag’s footsteps and chime in with JOBY reviews shortly. (See JOBY stock analysis on TipRanks)
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.