Every investor knows that the best way to make money is to buy cheap and sell expensive. That is one of the most important rules of any economic trading system. The trick is to know when the stock price is low enough to buy some. When the stock price is at its lowest, it’s the best time to buy. This will give you the best return when the price starts to rise again.
There are a lot of clues investors can use to find the bottom of a price. Today, we’ll look at how insiders are buying.
Insiders, like corporate officers, board members, and others “in the know,” don’t just run the companies; they also know the details. Legally, they are not allowed to sell or openly trade on this information, and rules about disclosure from government regulators help keep insiders honest. Their honest stock trades, on the other hand, can teach us a lot. These are the people who know the most about certain stocks. So, pay attention when they buy or sell in large amounts.
So let’s start using this. We used the Insiders’ Hot Stocks tool on TipRanks to find stocks where insiders recently made “informative” purchases, and then we sorted those stocks to find three whose share prices have dropped by more than 40% this year. Also, Wall Street analysts have given both of these stocks a lot of praise. Based on analyst price targets, each has a chance of going up by more than 90%.
Iovance Biotherapeutics is a company that makes medicines (IOVA)
We will start with Iovance Biotherapeutics, a company that does research in the field of medicine. This company focuses on a new way to treat cancer by using tumor-infiltrating lymphocytes to attack cancerous cells. In short, the company is working on a way to use the patient’s own immune system to attack tumours. This will be done by using immune cells (lymphocytes) that naturally go into cancerous growths and attack them.
Iovance’s pipeline is both active and diverse. It has six drug candidates in different stages of clinical trials, and two of them are being tested as monotherapies and in combination with other drugs against different types of cancer at the same time.
But late last month, the stock dropped more than 50% in a single day after the company released clinical data from cohort 4 of its pivotal trial on its top drug candidate, lifileucal. In the study, the drug is being looked at as a way to treat advanced melanoma. Patients showed an objective response rate of 29% in the most recent data release. In an earlier group of patients in the same study, the objective response rate was 36%. Investors were turned off by the fact that cohort 4 had a lower success rate, and the price of the stock showed that.
At the same time, management is still optimistic. They point out that lifileucal is meeting the study goals, and they say again that the company still plans to start the Biologics License Application process with the FDA in August of this year.
When you look at the insider trading, you can see how optimistic the management is. In the past few days, there have been a lot of insider purchases, and one of them stands out. Wayne Rothbaum, a member of Iovance’s Board of Directors, made a big purchase last week. He bought 1 million shares of IOVA for $6.59 million.
Reni Benjamin, a JMP analyst, is also optimistic about this stock, and he makes a clear case for buying it because the potential gains are bigger than the risks.
“With positive feedback from the FDA about the potency assay matrix, positive results in frontline melanoma in combination with pembro as well as second-line as a monotherapy, a BLA submission expected in 3Q22, continued progress in solid tumour trials, including combination studies with checkpoint inhibitors in early-stage disease, and a strong cash position of $516.0MM, we think Iovance is a unique investment opportunity and would buy shares “Benjamin opined.
Benjamin put his money where his mouth is by putting a $25 price target on the stock. This shows that he thinks the stock will go up by 232 percent in the next year. Not surprisingly, Benjamin thinks the stock will do well (i.e. Buy). (Click here to see Benjamin’s track record.)
Overall, Wall Street hasn’t changed its mind about this stock, as shown by the fact that 10 of the 11 recent analyst reviews said “buy” and only one said “hold.” The stock is selling for $7.53, and the average price target is $26.22. This means that the stock could go up by 248 percent in the next year. (Check out the TipRanks stock forecast for IOVA)
Wheels Up Experience (UP)
Now we’ll go in a different direction and look at Wheels Up Experience, a commercial aviation company. In particular, Wheels Up runs an app that connects people with people who run private jets. This makes charter or private jet travel available to more people than just the very rich. Users who are members of Wheels Up can use a network of more than 1,500 private planes that have all been checked out and found to be safe.
Wheels Up had a strong year-over-year revenue growth of 24% in the first quarter of 2022, bringing its total top line to $325.6 million. This was because the number of active users of the app went up by 26%, to 12,424 in the quarter. The company took 17,626 live flight legs, which is a measure of how much travel was done. This is 15% more than the same quarter last year.
Even though the number of passengers is going up, the stock is down by about 44% so far this year. When investors look at the earnings, it makes them worry even more.
In 1Q22, Wheels Up had a net loss of $89 million, which was $56.8 million more than the same time last year. The net loss grew from 17 cents per share in the 1Q21 report to 36 cents per share in this report. Even though Wheels Up is getting more members and users and offering more flights, the company is still having trouble making money.
Even so, company insider David Adelman, who is also a director, spent $647,500 last week to buy a set of 250,000 shares. This buy is about the same size as one made in March of this year.
Aaron Kessler, a 5-star analyst, is also sure about the future of this company. When Kessler writes about UP for Raymond James, he says: “We think the company will be able to get back to contribution margins in the high single digits by the end of 2023. Our positive fundamental view is based on: 1) a large and growing private aviation TAM; 2) Wheels Up being the leading on-demand private aviation marketplace; 3) membership-based model driving predictable revenue base; and 4) our expectation of 15 percent or more long-term revenue growth and 10 percent or more long-term EBITDA margins.
Kessler thinks the long-term outlook for this company is good, and he backs this up with an Outperform (Buy) rating and a $5 price target, which means the stock could go up by 91 percent in one year. (Click here to see Kessler’s record.)
So, one 5-star analyst says that bulls should buy this stock. What do the rest of Wall Street’s analysts think about UP’s chances? Seven analysts have recently written about the stock. Four of them say to buy it, two say to hold it, and one says to sell it. With a trading price of $2.62 and an average price target of $5.40, the stock could go up by 106 percent over the next 12 months.
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Disclaimer: The opinions in this article are only those of the analysts who were interviewed for it. The content is meant to be used only as a source of information. Before you put money into something, you should do your own research.