Markets had an amazing day yesterday; the Dow closed up 11.36%, while the S&P 500 gained 9.38%. The gains on the S&P reversed the indexes losses from the previous three trading sessions. It was clearly a bullish day, and gives hope that traders may yet be able to break the market swoon.
Following the upbeat lead of the trading session, we’ve dipped into TipRanks’ Insiders Stocks tool, looking for purchase options that may otherwise fly under the radar. Our look into the database has brought up three stocks that have seen recent strong purchases from company insiders. All three are bargains and offer investors well over 100% upside potential, according to analysts. Let’s see what else makes these stocks worth a second look.
Kimbell Royalty Partners (KRP)
We’ll start in Texas’ oil patch, which despite crashing oil prices (both WTI and Brent have broken below $30 in the last two weeks, and WTI is selling for just $24.94) remains a major driver in the American oil industry. Kimbell Royalty owns and operates over 38,000 active wells across all of the major American oil regions, with 43% of its activity in the Texas Permian Basin.
Just after the market crash, Kimbell reported its Q4 and FY2019 results. Revenues for both reporting periods were up year-over-year. Quarterly revenue came in at $27.2 million, up 18%, while full year revenue gained 64% to reach $107.5 million. Kimbell also announced another acquisition of a competitor, buying the oil and natural gas mineral rights from Springbok Energy Partners for $175 million.
High earnings and a forward-looking acquisition strategy provide a solid base for Kimbell’s dividend, which the company is committed to maintaining. KRP has kept an ongoing policy of adjusting the regular quarterly payments to keep them affordable. The current dividend, 38 cents, was paid out in January and annualizes to $1.52, or an incredible 31% yield. The yield is high because the share price has been pushed down – but Kimbell’s reputation for paying is reliable, and quite frankly, there are few investments of any sort that can boast a 31% yield.
In recent days, Kimbell has seen three major insider purchases. Robert Ravnaas, President and CFO, Matthew Daly, COO, and Board of Directors member Brett Taylor have all spent over $100,000 on blocks of KRP shares. The largest single purchase was Taylor’s, for $120,025. The purchases part of an insider buying spree that has totaled $379,500 in the past two weeks.
Covering KRP for Credit Suisse, right after the Q4 announcement, analyst Betty Jiang wrote, “Overall a somewhat quiet quarter given they’d already announced Springbok acquisition and are waiting for the transaction to close before providing FY20 guidance. That said, given the continued acquisitive activity management remains very confident in the LT growth outlook of 3-6%. KRP is also seeing good growth on all facets of the broader portfolio… KRP continues to benefit from a best-in-class low PDP decline rate which helps insulate their growth outlook from the broader volatility in operator activity.”
Jiang rates the stock a Buy, with a price target of $19. At current levels, that implies an upside of 320%. (To watch Jiang’s track record, click here)
KRP shares have a Strong Buy rating from the analyst consensus, based on 5 Buy-side reviews against a single Hold. Shares are down to $4.52, and the $15.83 average price target suggests room for 250% upside growth in the next 12 months. (See Kimbell stock analysis on TipRanks)
Next on our list is a small-cap health management company based in California. Catasys manages a provider network for a variety of employer and union health plans – and sees no negative impact from the current coronavirus spread. In fact, according to Catasys’ Q4 earnings release, the economic impact of coronavirus on the company has been net positive. Sometimes, it pays to be in healthcare.
The company uses AI to power a tracking platform, meant to facilitate health care plan members in treating behavioral health conditions – to prevent or ameliorate chronic medical conditions. Diabetes, hypertension, heart disease, and COPD are all serious conditions incurring high medical costs – but all can be addressed, at least in part, by less costly non-medical measures which Catasys’ platform encourages.
CATS reported record enrollment up to March 2020, along with $35.1 million in full-year 2019 revenues. That revenue number represented 131% year-over-year annual growth. For Q4 alone, the $11.8 million in reported revenue was up 33% sequentially and 109% yoy. Expenses continued to exceed revenues, however, and CATS also reported a 52-cent per share net loss in Q4, far deeper than the 9-cent loss one year earlier.
Catasys is also in the midst of upper management turnover, appointing a new CFO and a new EVP in recent weeks, with both appointments effective this month, after bringing in a new company President and COO this past December. That last appointment led to a major insider stock purchase when the new President, Curtis Medeiros, picked up two large blocks of shares, totaling over 40,000 shares, earlier this month. Medeiros bought the shares in two lots, spending just under $200,000 on each purchase. The buy is seen as a clear sign of management confidence in the company and stock.
In his comments on CATS, Close wrote, “As we called out following last week’s 4Q’19 financial report, the re-vamped management team is applying their significant corporate experience to improve operational processes and workflows which should lead to improving enrollment, retention, new client sales, and ultimately significant sustained revenue growth and profitability.”
Some stocks fly under the radar, and CATS is one of those. Close’s is the only recent analyst review of this company, and it is decidedly positive. (See Catasys stock analysis on TipRanks)
Columbia Property Trust (CXP)
Last on our list is a real estate investment trust (REIT), focused on office properties in major urban areas. The company’s main activities are located in New York, San Francisco, and Washington DC, with additional properties in Boston and Los Angeles. Columbia’s properties total 6.8 million square feet, with 97% of the portfolio leased out – and better, the company’s average lease has 6.4 years remaining.
Columbia made two major acquisitions in 2019, a 235,000 square foot office building in Manhattan for $205.5 million, and a 252,000 square foot building in San Francisco for $238.9 million. CXP reported 8 cents per share in net income for the year, exceeding its full-year high-end guidance. The company’s operations supported a generous dividend, with the 21-cent quarterly payment annualizing to 84 cents, and giving a yield of 9.1%. That yield is more than four times the average dividend among S&P listed companies. At 61%, the payout ratio indicates that the dividend is stable and sustainable.
Three company officers have made large stock purchases in the past two weeks. First was Jeff Gronning, CIO, who bought 9,500 shares for $148,975. His purchase was followed by two from Board member John Dixon, who bought two blocks of 5,000 shares each, for a total of $130,000. The last purchases, by company President and CEO Nelson Mills, totaled over $250,000. Mills picked up two blocks of, of 21,056 and 6,000 shares. The purchases, taken together, show that management is committed to the company.
SunTrust Robinson, in a report that updates earlier comments by 5-star analyst Ki Bin Kim, keeps a Buy rating on CXP shares. The $23 price target implies an upside of $149. (To watch Kim’s track record, click here)
Writing on the stock, Kim says, “We like CXP’s now more focused portfolio, catering largely to growing tech & media tenants. Investors will want to see management find a good balance in the use of JV structures and value-add development pursuits, and maintain comfortable financial leverage. The stock has been under pressure, like most office REITs, but we think it is relatively undervalued.”
Columbia’s Moderate Buy analyst consensus rating is based on three reviews, including 2 Buys and 1 Hold. Shares are priced at a discount, just $10.22, and the average price target of $23 matches that of SunTrust. (See Columbia Property stock analysis on TipRanks)