2iQ Insider Brief: Boohoo Group PLC (BOO: LN)Forterra Inc (FRTA: US)Capri Holdings Ltd (CPRI: US)

Kaloyan Kolev 27 August 2019

Boohoo Group PLC (BOO: LN)

 12-month performance: +34%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors
Recent news: Acquired two fashion companies

 

Boohoo Group is a UK-based online fashion retailer. The company owns the brands Boohoo, PrettyLittleThing, Nasty Gal, MissPap, Karen Millen, and Coast. The stock is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and currently has a market capitalisation of £2.7bn.

Boohoo shares have performed well in 2019 so far, rising 44%. The group’s financial results have continued to be strong – full-year revenue for the year ended 28 February 2019 was up 48% – while the company has also made a number of acquisitions which should further boost its top line going forward. Brokers are generally quite positive on the stock with Jefferies recently upgrading its price target to 325p – 40% higher than the current share price.

BOO_LN

Source: 2iQ Research

Looking at insider transaction activity, we think Boohoo shares have the potential to keep rising. We say this because last week four directors purchased shares in the company, which suggests these insiders are confident in relation to the company’s future prospects. Interestingly, one of these directors, Iain McDonald, who went long at a share price of 225p, was previously a top-ranked retail and e-commerce analyst at a UK investment bank. Given this bullish pattern of insider buying, we think the outlook for the stock is favourable.

 

Forterra Inc (FRTA: US)

 12-month performance: -27%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including new CEO
Recent news: New CEO appointed

 

Forterra is a US-based manufacturer of pipe and precast products. Operating approximately 95 strategically-located facilities across the US and Canada, the group offers a wide range of products for water-related infrastructure applications, including water transmission, distribution and drainage. The stock is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $430 million.

 

After a disappointing 2018 in which Forterra generated a net loss of $24.4 million and its share price fell from $11 to $4, the company has shown signs of a turnaround this year. Second quarter earnings came in at $0.08, well above the consensus estimate of $0.05, while sales for the quarter increased 9% on the same period last year. The company has also recently appointed a new CEO, Karl Watson, who has a successful track record in the construction materials industry. Year to date, the shares have rebounded 76%.

FRTA_US

Source: 2iQ Research

Examining insider transaction activity, we think Forterra shares could be set to continue climbing. We say this because throughout August we have observed share purchases from three directors – which we see as a bullish signal. Of the three insiders who purchased shares, one was new CEO Watson, who spent $452,488 to acquire 65,200 shares, which suggests he is confident he can improve the group’s performance. With analysts at Citigroup recently raising their price target for Forterra from $6 to $7.50 and multiple directors acquiring shares, we think the stock has the potential to deliver further gains.

 

Capri Holdings Ltd (CPRI: US) 

12-month performance: -62%
Insider activity: Bullish
Buying pattern: Large purchases from CEO
Recent news: Disappointing Q1 results

 

Capri Holdings, formerly known as Michael Kors Holdings, is a multinational fashion holding company. The company owns the Michael Kors, Jimmy Choo, and Versace brands, and operates through three segments: retail, wholesale, and licensing. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $4.3 billion.

 

Capri Holdings shares have underperformed over the last year, falling from $74 to $28. The market didn’t like the group’s $2.35 billion acquisition of Versace last September, while second-quarter results, released in November, also disappointed investors. More recently, trade tariff uncertainty has impacted the stock, while its high-end brand Versace has been embroiled in political issues involving China.

CPRI_US

Source: 2iQ Research

What we think is interesting about Capri Holdings is that Chairman and CEO John Idol has been buying a substantial quantity of shares while the stock has been out of favour. Last week, the insider spent $10 million on stock, acquiring 363,000 shares for his personal holding, while in late May and early June the top-level director spent $20 million on stock to pick up 615,000 shares. Clearly, Idol – who has been Chairman since 2011 and Chief Executive since 2003 and is likely to have an excellent understanding of the industry – sees turnaround potential. Given his industry experience, we think the stock is worth a closer look at current levels.

Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.

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