Year: 2024

After bouncing back from the early August dip, the stock market opened September with another round of losses. In volatile times, investors need a clear signal, something to suggest a particular stock is ready to climb.

Insider buying is one of the clearest signs available. The insiders are corporate officers, company officials responsible to both Boards of Directors and stockholders of all stripes for ensuring profits and returns – and their positions give them access to the inner workings of their companies. The key point to remember: insiders may sell shares in their own companies for any number of reasons, but they only buy when they believe the stock is on track to gain. And when the insiders start spending millions on their shares, investors should take notice.

To keep things fair, financial regulatory authorities require that insiders publish their trades – and we can use the Insiders’ Hot Stocks tool, from TipRanks, to follow the trends of the insiders’ trades. The data aggregated by the tool points out the stocks that the insiders like, and we can follow those shares, dipping into the details to find out just what makes them so compelling.

Bill.com Holdings (BILL)

The first stock on our radar, Bill.com, is a cloud software provider focused on the small- and medium-sized business niche, where it offers customers solutions for the accounting and paperwork requirements of the business world. With Bill.com’s platform, small business managers can automate, digitize, and simplify the back-office financial issues and processes that come up, whether they occur every day or once a year. The company’s platform lets its users find greater efficiency in their billing, payment processing, and invoicing activities.

Small and medium businesses are always looking for efficient solutions to smooth out their paperwork, and Bill.com, which lets them put all of this into one place, has leveraged that fact into a successful business model of its own. The company has created a one-stop-shop for its customers, small entrepreneurs looking to save costs on some of their world’s most time-consuming requirements. Some of the platform’s features include allowing the creation and payment of bills for accounts receivable and payable, and management of expenses and budgets.

In the last reported quarter, covering fiscal 4Q24 (June quarter), Bill.com had a top line of $343.7 million for the quarter, gaining over 16% year-over-year and beating the forecast by almost $15.7 million. The company’s bottom line, 57 cents per share by non-GAAP measures, was 10 cents per share better than had been anticipated. And, looking forward, the company’s fiscal Q1 revenue guidance, in the range of $346 million to $351 million, was well ahead of the $336.95 million consensus.

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The guide wasn’t an all-out success, however, as for FY25, revenue is expected in the range between $1.41 to $1.45 billion, at the midpoint below consensus at $1.44 billion, while non-GAAP EPS is expected to come in between $1.36 to $1.61, some distance below the Street’s $2.21 estimate.

Meanwhile, shares have been drifting lower this year, and evidently those in the know have been thinking the time is right for loading up. When we turn to the insider trades on BILL, we find several recent informative buys of more than $1 million each. John Rettig, CFO, picked up 21,124 shares for $1.04 million; Brian Jacobs, of the company Board, bought 25,000 shares for $1.338 million; and Rene Lacerte, CEO and Board member, spent an impressive $2.095 million on 42,248 shares of BILL. Currently, Jacobs and Rettig’s holdings are worth $12.25 million and $7.7 million, respectively; Lacerte’s holding is valued at almost $146 million.

This stock is covered by analyst Joseph Vafi, from Canaccord Genuity. Vafi is rated among the upper 3% of his peers by TipRanks, and he sees Bill.com as a good option under current conditions. He writes, “Against a macro backdrop that remains tough, Bill’s fintech value proposition for SMB’s continues to resonate. At a high level, we note that even though Bill’s SMB target market is more economically sensitive than large enterprises, most of the company’s KPIs and financial metrics are still sector wide standouts. We attribute this continued relative outperformance to what remains a still relative greenfield in SMB FPA/payments combined, strong channel partnerships and what is a great service set of service offerings.”

Vafi goes on to put a Buy rating on the shares, while his $100 price target suggests a one-year gain of 87.5%. (To watch Vafi’s track record, click here)

Overall, BILL shares get a Moderate Buy consensus rating from the Street, based on 22 recent recommendations that include 11 Buys, 10 Holds, and 1 Sell. The stock is priced at $52.75 and its average target price implies a gain of 30% on the one-year horizon. (See BILL stock forecast)

Butterfly Network (BFLY)

One of the greatest advances of medical technology was the development of medical imaging. Starting with the discovery of X-rays in 1895, and the application of that discovery to diagnostically important images of a patient’s hand one year later, medical imaging has grown to become a vital specialty in the health care profession, with a powerful impact on improved patient outcomes. Butterfly Network has taken upon itself the goal of ‘democratizing medical imaging,’ by making it accessible to everyone, no matter where in the world they are. The company has developed a groundbreaking technology, dubbed Ultrasound-on-Chip, that can integrate into hospital and clinic networks and transform the delivery of care – by allowing a single-probe, whole-body, ultrasound imaging solution at the point-of-care.

In short, this is portable ultrasound imaging tech at the next level, using handheld scanner technology and miniaturized components. Butterfly’s portable systems cost less than older ultrasound systems, are more accessible, and are easier to use. Ultrasound is a long-known niche within the medical imaging field, and large numbers of providers are experienced in interpreting the images, making it a good choice for a technology company that aims to expand the base of medical imaging users.

In 2Q24, revenues reached a record $21.5 million, a figure that was up more than 16% year-over-year and $1.9 million better than had been forecast. At the bottom-line, the 7-cent per share net loss came in 3 cents per share better than the estimates.

There is only one recent ‘informative buy’ insider purchase on BFLY shares, and it’s something of a doozy. Larry Robbins, of the Board of Directors, bought 1,676,869 shares of the stock – and paid just over $1.675 million for the shares. Robbins now holds company stock worth $15.85 million.

Joshua Jennings, in his coverage of Butterfly for TD Cowen, is impressed by the company’s product line, especially its new iQ3, which was launched earlier this year. Jennings sees the product as just one of several potential growth engines for Butterfly, and writes of the company, “Although the 3Q guide implies a slight deceleration from 2Q, we think the setup for BFLY in the back half of 2024 is intriguing as the company will have multiple growth channels (especially iQ3) which will continue to ramp through the remainder of the year and could provide upside to current guidance. Following its launch in February, BFLY’s iQ3 device is already seeing significant commercial demand from customers… We’re encouraged by the iQ3 commercial progress and will look for more updates on the launch in the quarters ahead.”

For Jennings, all of this adds up to a Buy rating for this stock. His price target, currently set at $3 per share, implies an impressive 12-month upside of 152%. (To watch Jennings’ track record, click here)

While there are only 2 recent reviews of this stock on file, they are both positive – giving the stock a Moderate Buy consensus rating. The shares are trading for $1.19, and the average target, at $3.38, is even more bullish than Jennings allows, suggesting a strong upside of 184% for the coming year. (See BFLY stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a 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.

As she continues to fill in the details of her economic platform, Vice President Kamala Harris on Wednesday called for raising the capital gains tax to 28% for those earning more than $1 million a year, offering a smaller increase than the one proposed by President Joe Biden.

The current capital gains tax rate is 20%, which Biden has proposed raising to 39.6% for top earners. There is an additional 3.8% investment tax for those with high incomes, which Biden wants to raise to 5%, producing a potential top rate of 44.6%. Harris did not say what she wants to do with the investment tax, but The Wall Street Journal reports that she favors raising it along the lines Biden has proposed, producing an all-in top rate of 33% for her proposal – more than 10 points lower than Biden’s all-in top rate.

Harris said her proposal strikes a balance between encouraging investment and ensuring that wealthy investors pay enough in taxes overall. “While we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America’s innovators, founders and small businesses,” Harris said at a campaign event in Portsmouth, New Hampshire.

In addition to the capital gains tax proposal, Harris called for providing more support for small businesses and entrepreneurs. Harris wants to raise the small business tax deduction from $5,000 to $50,000, and create a standard deduction that can be used by all small firms.

Harris said she will set a goal of 25 million new small businesses in her first term, surpassing the record 19 million seen under Biden. “As president one of my highest priorities will be to strengthen America’s small businesses,” she said.

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A look at the day ahead in European and global markets from Ankur Banerjee

Markets hit the pause button after a selloff in equities since the start of the week but sentiment remained fragile, as worries re-emerged over the prospects for the U.S. economy and investors focused squarely on this week’s job reports.

Labour data on Wednesday suggested the U.S. jobs market was losing steam, raising expectations the Federal Reserve may resort to large interest rate cuts, while additional reports including Friday’s non-farm payrolls data are keeping sentiment on edge.

Futures indicated European bourses were set for a subdued open after Asian shares rose 0.4% on Thursday, clawing back some of the week’s losses, although the MSCI’s broadest index of Asia-Pacific shares outside Japan is still down 2.2% so far this week.

Risk sentiment remained frail, with the yen holding on to its gains for the week as traders seek safe assets while the dollar was steady in Asian hours after weakness overnight.

Hawkish rhetoric from the Bank of Japan also supported the yen after BOJ board member Hajime Takata hinted the central bank should stay on course to raise interest rates.

While the spotlight this week will be on Friday’s U.S. non-farm payrolls report, in the meantime Thursday’s U.S. jobless claims reading and euro zone retail sales data will keep investors busy.

The markets are keen for clues on whether data will dictate that the Fed cut interest rates by 25 basis points (bps) or 50 bps when it meets later this month. Traders added to wagers of a 50 bps cut following the job openings data and are now pricing in a 44% chance, up from 38% a day earlier.

Investors are also pricing in 110 bps of cuts from the remaining three Fed meetings this year, and when you factor in the Fed’s focus on the labour market, it looks like economic data in the next few weeks will be put under the microscope by increasingly skittish investors.

Key developments that could influence markets on Thursday:

Economic events: Euro zone August retail sales; August construction PMI data for Germany, France and euro zone

(By Ankur Banerjee; Editing by Edmund Klamann)

For well over a century, Wall Street has been a wealth-building machine. Although other asset classes have delivered positive nominal returns, including bonds, housing, and various commodities, such as gold, none have come close to matching the annualized total return of stocks, including dividends, over the last century.

While there are thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, certain investment strategies have, historically, worked better than others. One such approach that’s been documented as a long-term winner is buying and holding time-tested dividend stocks.

Companies that regularly share a percentage of their earnings with investors are almost always profitable on a recurring basis, and they’ve typically demonstrated to Wall Street their ability to navigate challenging economic climates. What’s more, income stocks have a knack for providing transparent long-term growth outlooks. In other words, it’s not a surprise that dividend stocks have, as a whole, increased in value over time.

What may come as a shock is by how much dividend stocks have outperformed non-payers over the long run.

Last year, the investment advisors at Hartford Funds released a report — The Power of Dividends: Past, Present and Future — that compared the performance of income stocks to non-payers over the last half-century (1973-2023), as well as analyzed their relative volatility to the benchmark S&P 500. Whereas non-payers generated a modest 4.27% annualized return and were, on average, 18% more volatile than the S&P 500, dividend stocks delivered a 9.17% annualized return with 6% less volatility than the broad-market index.

Despite the S&P 500 sitting just a stone’s throw from an all-time high, amazing deals can still be found among dividend stocks. As we move forward into September, two electrifying ultra-high-yield dividend stocks — sporting an average yield of 9.02% — are begging to be bought by opportunistic income seekers.

Time to pounce: Enterprise Products Partners (7.16% yield)

The first high-octane dividend stock that income investors can pounce on with confidence in September is energy juggernaut Enterprise Products Partners (NYSE: EPD). Enterprise has raised its base annual payout for 26 consecutive years.

To be upfront and transparent, investing in the oil and gas industry isn’t for everyone. The memory of the demand cliff for energy commodities that occurred during the COVID-19 pandemic is likely still fresh in the minds of most investors. Thankfully, Enterprise was able to avoid the lion’s share of this operating turmoil, which is what makes it such a solid income-generating investment.

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Unlike drillers, which tend to sport high margins but can be easily whipsawed by vacillations in the spot price of crude oil, Enterprise Products Partners is one of America’s largest midstream energy companies. Midstream providers are effectively energy sector middlemen that own and operate pipelines, storage, and fractionation facilities.

The great thing about midstream oil and gas stocks is they tend to produce highly predictable operating cash flow in any economic climate.

Enterprise’s not-so-subtle secret to transparent and predictable operating cash flow is that its signs long-term and predominantly fixed-fee contracts with drilling companies. The “fixed-fee” aspect of these contracts removes the effects of inflation and spot-price volatility from the equation. In turn, this allows Enterprise’s management team to accurately forecast the company’s cash flow multiple quarters, if not years, in advance.

Being able to know ahead of time, with accuracy, how much cash flow Enterprise Products Partners will generate in a given year is critical to management’s decision-making process. For example, it’s given management the confidence to put $6.7 billion to work in various major projects, most of which are tied to increasing its natural gas liquids exposure.

Furthermore, cash flow transparency has fueled Enterprise Products Partners’ bolt-on acquisition strategy. Just two weeks ago, Enterprise announced its intention to acquire Pinion Midstream for $950 million in cash. Pinion is a natural gas gathering and treatment company in the Delaware Basin of New Mexico and Texas. This deal is expected to add $0.03 per unit in distributable cash flow next year.

A multiple of 7.5 times next year’s cash flow, based on Wall Street’s consensus, is a fair price to pay for a company that consistently fires on all cylinders.

Time to pounce: PennantPark Floating Rate Capital (10.88% yield)

A second electrifying ultra-high-yield dividend stock that income-seeking investors should strongly consider pouncing on in September is little-known business development company (BDC) PennantPark Floating Rate Capital (NYSE: PFLT). PennantPark pays its dividend on a monthly basis and its yield is closing in on 11%!

BDCs are businesses that aim to generate income by investing in the equity (common/preferred stock) and/or debt of middle-market companies — i.e., typically small and unproven businesses.

Although it ended June with nearly $209 million of common and preferred stock in its portfolio, the $1.45 billion in debt securities PennantPark Floating Rate Capital holds makes it a decisively debt-focused BDC.

One of the clearest advantages of being a debt-focused BDC for middle-market companies is yield. Unproven businesses usually have limited access to traditional credit markets and basic financial services. When they can access capital, they’re typically going to pay an above-market yield on what they borrow. As of June 30, PennantPark’s $1.45 billion debt-securities portfolio had a weighted-average yield of 12.1%.

Another advantage to this debt-driven investment portfolio is that it’s 100% variable rate. The steepest rate-hiking cycle executed by the Federal Reserve in four decades sent PennantPark’s weighted-average yield on debt investments from 7.4%, as of Sept. 30, 2021, to the 12.1% reported on June 30, 2024. Even with the nation’s central bank expected to kick off a rate-easing cycle later this month, this will be a slow-stepped dropdown in rates. In short, PennantPark’s weighted average yield on debt investments should remain robust.

PennantPark’s management team also deserves a tip of the cap for the ways it’s mitigated risk. Even though PennantPark is investing in smaller, speculative companies, its non-accrual (delinquency) rate in the June-ended quarter amounted to just 1.5% of the cost basis of the company’s portfolio.

Investment diversity is one way the company has avoided trouble. Inclusive of its equity investments, it has roughly $1.66 billion spread across 151 companies, which works out to an average investment size of $11 million. No single investment is large enough to sink the proverbial ship.

Likewise, 99.9% of its debt is held in first-lien secured notes. If one or more of the company’s borrowers were to seek bankruptcy protection, first-lien secured debtholders stand at the front of the line for repayment.

A forward price-to-earnings ratio of 9, coupled with an almost 11% yield, is a recipe for success for patient income seekers.

Should you invest $1,000 in Enterprise Products Partners right now?

Before you buy stock in Enterprise Products Partners, consider this:

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*Stock Advisor returns as of September 3, 2024

Sean Williams has positions in PennantPark Floating Rate Capital. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

Time to Pounce: 2 Electrifying Ultra-High-Yield Dividend Stocks That Are Begging to Be Bought in September was originally published by The Motley Fool

Shares of Super Micro Computer (NASDAQ: SMCI) fell 37.6% in August, according to data from S&P Global Market Intelligence. The server systems builder took two heavy hits last month, and shares are now trading 64% below the peak they reached in March.

Market-moving news

First, Supermicro reported its fiscal 2024 fourth-quarter results on Aug. 6. Earnings came up far short of both Wall Street’s consensus estimates and management’s guidance as Supermicro’s cost of sales grew faster than revenues. Soaring operating expenses also weighed on its net profits. Furthermore, earnings guidance for the next quarter came in below the average analyst’s projections.

Management also announced plans for a 10-for-1 stock split that day, but investors focused on the soft bottom-line result. The stock closed 20.1% lower the next day.

The second big drop came near the end of the month. A popular short-selling service posted a negative review of the company on the same day that Supermicro announced that the filing of its full-year 10-K report would be delayed. It’s hard to say which event hit the stock harder, but the overall effect was a single-session price drop of 19%.

Supermicro’s long-term shareholders are still doing great

The triple whammy of disappointing earnings, late financial filings, and a critical analyst report took the shine off Supermicro, but its long-term performance has still been impressive. There are 3,692 stocks on the U.S. market with at least five years of trading history. Supermicro leads the whole pack with a five-year compound annual growth rate of 95.1%.

So don’t cry for long-term Supermicro investors at this point — more recent trend chasers are the ones who have been left holding the bag.

Moreover, the stock looks reasonably affordable now, trading at 4.9 times trailing sales and 9.5 times forward earnings estimates. The artificial intelligence (AI) boom has created sustained high demand for powerful number-crunching computer systems, and Supermicro remains well positioned to exploit that trend. If you were keeping your hands off Supermicro’s soaring stock earlier this year, this steep price drop just might have created the buying opportunity you were looking for all along.

Should you invest $1,000 in Super Micro Computer right now?

Before you buy stock in Super Micro Computer, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Story continues

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $661,779!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 3, 2024

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Super Micro Computer Stock Plunged 37.6% in August: Here’s Why was originally published by The Motley Fool

Investors continue to gobble up shares in AI companies, eager to profit off the red-hot sector, but the sharks are circling. The activist short-selling firm Hindenburg Research, famous for its market-making takedowns of top companies such as Block and Adani Group, published two reports last week on companies it views as unduly benefiting from the AI boom: the server and storage manufacturer Super Micro, and the software company iLearningEngines. Both companies’ share prices fell sharply in response.

The reports come amid escalating hype around AI companies, from hyperscaler giants such as Microsoft and Google to hardware firms and even utilities that could profit from the demand. Last week, the GPU manufacturer Nvidia announced better-than-expected earnings results but its stock price still dropped, reflecting growing caution about the frothy industry, especially among institutional investors.

The twin reports from Hindenburg are an even stronger signal of bubble fears, with short-selling firms known to aim at companies or sectors they view as overvalued. Some, including Hindenburg, will take short positions—or bets that a stock will go down—on a company before publishing their findings, hoping they will reap a handsome return from a falling share price.

View this interactive chart on Fortune.com

‘Accounting manipulation’

Hindenburg’s first report came on Tuesday focused on Super Micro, a manufacturer of hardware such as servers and motherboards that are key to AI companies. Prior to Hindenburg’s research, Super Micro had a market cap of around $35 billion, though it fell as much as 26% in the day following the report and has remained around $26 billion.

Super Micro already had a track record of dubious practices, including a temporary delisting from Nasdaq in 2017 for failing to file financial statements, along with SEC charges in 2020 for “widespread accounting violations” that came with a $17.5 million settlement.

In its report, Hindenburg alleged that Super Micro had “ridden the wave of AI enthusiasm” while continuing what the short seller deemed “accounting manipulation.” Based on interviews with former employees and customers, Hindenburg found fresh evidence that Super Micro rehired top executives who were involved in the previous scandal, pushed salespeople to ship defective products to meet quotas, and maintained relationships with undisclosed parties, including two Taiwan-based entities owned by the youngest brother of Super Micro’s CEO. “Basically it’s a governance issue,” a former executive told Hindenburg.

The day after the report, Super Micro issued a press release announcing that it would not file its annual report with the SEC on time in order to “complete its assessment of the design and operating effectiveness of its internal controls over financial reporting.”

When reached for comment, a Super Micro spokesperson shared a CEO letter from Tuesday filed with the SEC on Tuesday stating that neither the Hindenburg report nor the delayed annual filing “affects our products or our ability and capacity to deliver the innovative IT solutions that you rely on every day.” The letter added that the report contained “false or inaccurate statements about our company including misleading presentations of information that we have previously shared publicly.”

Despite the negative outlook, Hindenburg did admit a bull case for Super Micro, which would entail “meteoric growth” in response to demand for AI chips. The short-selling firm cited Bloomberg, where analysts forecast 87% revenue growth in 2025—or at least, before the report came out.

‘Artificial partners and artificial revenue’

Hindenburg’s report on iLearningEngines from Thursday proved even more damning. Similar to Super Micro, Hindenburg characterized iLearningEngines as a company taking advantage of the AI wave, though the short seller expressed skepticism that the company ever had a focus on the emerging sector prior to the boom.

iLearningEngines went public through a SPAC in April 2024, though its share price sat around just $3 before the report, falling to under $1.50 after Hindenburg’s investigation with a market cap of around $175 million.

While iLearningEngines claims to be an “early pioneer in enterprise AI” through “learning automation” software, Hindenburg alleged that the company lied to the SEC during its SPAC process by misrepresenting its partners and revenue streams. Hindenburg also argues that iLearningEngines has “no obvious industry presence” and nonexistent revenue, despite claiming more than 1,000 enterprise customers. “We do not expect it will remain a public company for long,” the short-seller concluded.

“We have reviewed the full report and believe it contains misleading statements,” iLearningEngines said in a statement published following Hindenburg’s report. “We intend to respond in the coming days.”

A spokesperson did not immediately respond to a request for further comment.

While Super Micro and iLearningEngines are smaller companies in the broader AI field, the entire sector experienced a sell-off on Tuesday, the first day of trading in September. Nvidia and other chip manufacturers continued to trade down, with the tech-heavy Nasdaq falling over 3%.

This story was originally featured on Fortune.com