3 Stocks With Accelerating Earnings & Growing Institutional Support
Apollo Medical Holdings (NASDAQ: AMEH), Perficient (NASDAQ: PRFT) and National Storage Affiliates Trust (NYSE: NSA) are all growing in institutional s...
What do those stocks have in common? They’re all growing in institutional sponsorship, and all have shown accelerating revenue or earnings growth in recent quarters.
Growing earnings and sales attract big institutional investors, like mutual funds, exchange-traded funds, hedge funds, insurance companies, university endowments, banks, and foundations. When those big buyers start piling into a stock, they send the price higher.
However, institutions typically don’t take an entire position all at once. Instead, they scale into a stock. That’s because their buying could send the stock higher than what they are willing to pay at the moment, which would blow their investment strategy out of the water.
Often institutions will step in to buy shares once a stock has corrected after a previous run-up. That’s how they snag the best prices for securities they believe will deliver big returns.
Apollo Medical Holdings has been on a spectacular run, driven by growing fund sponsorship, not Wall Street Bets Redditors.
In fact, it’s gone almost parabolic, as it’s working on its ninth month in a row of double-digit price gains. The stock is up an astonishing 242.78% in the past three months, and 398.69% year-to-date.
The company operates a platform that allows physicians to coordinate care services with patients, hospitals, other physicians, clinics and insurance companies.
Apollo grew earnings from $0.29 per share in 2018 to $1.01 per share in 2020.
Quarterly earnings grew at double-, triple- or even quadruple rates in the past six quarters. The company’s potential attracted a growing number of mutual funds, hedge funds and asset managers.
Shares closed Monday at $91.11, up 6.70%, or $5.72. Obviously, as a glance at the chart shows, this is not a stock to enter at this time, as some profit-taking is inevitable. It’s best to wait for the next pullback.
Perficient has also been on a steady climb since November. The stock is up 75.32% in the past three months and 146.79% year-to-date.
The company offers digital consulting services in the areas of artificial intelligence, analytics, machine learning, business intelligence and custom product portfolios, among other specialties. Its clients are in various industries, including automotive, consumer goods, healthcare, financial services and manufacturing. Last week, Perficient announced the launch of a customer experience and recommendation engine for a digital bra-fitting platform from lingerie brand Wacoal.
Earnings grew at double-digit rates in each of the past eight quarters, with growth accelerating in the past three. Revenue growth also accelerated in the past three quarters.
On an annual basis, earnings accelerated for four years, with analysts expecting that trend to continue this year and next, with growth of 24% and 12%, respectively.
Institutional buying has outpaced selling in eight of the past 10 quarters.
This is another stock that’s well extended beyond a proper buy point. Investors would be well advised to wait for a pullback to the 50-day average before taking a position.
National Storage Affiliates Trust is a property REIT, focusing on the self-storage market. Like Apollo, share appreciation is beginning to have a parabolic look. It’s working on its tenth month in a row of upside trade.
Shares closed Monday at $53.43, a gain of $0.73, or 1.39%. Over the past three months, the stock is up 29.57%. It’s up 50.32% year-to-date.
The company has been growing through acquisition, as well as organically, with increasing same-store sales. Revenue growth accelerated in the past two quarters, while earnings accelerated in the past three.
The number of mutual fund owners grew in each of the past three quarters, from 506 to 568. Institutional buying was higher than selling in 10 of the past 11 quarters.
The last time the stock broke out of a base was in January, and it last tagged its 50-day line in May. In other words, the stock is another that’s too extended to buy at this point, but is worthy of a place on a watch list.
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