For the first time in a long time, we reviewed the previous week’s roster of insider purchases and found none that fit our “Insider Buy with a Purpose.” So, we went backwards to look for some buys that we skipped over at the time and appear more attractive today than they did then.
Early in March, Blue Apron Holdings, Incorporated’s (APRN) Chief Executive Officer (CEO) and a director bought a combined 24,790 shares of the direct-to-consumer food and ingredients company at $7.04 and $7.14, respectively. (1) As of this keystroke, Blue Apron is trading at $6.57 and has been as low as $6 since the pair opened their checkbooks, more like virtual wallet nowadays.
CEO Linda Kozlowski has primarily been a seller of Blue Apron. Since 2019, she unloaded nearly $3.5 million of the food company’s stock in eight transactions. Meanwhile, she made two purchases for a combined $130,682 since September 2020.
In September 2020, the CEO bought at $6.88 and then turned around and sold two months later at $7.20. Shortly thereafter, the stock tanked to $4. Kozlowski turned bullish in early March and bought 10,700 shares for a total investment of $75,283 at $7.04. (2)
Swinging lower has made Blue Apron more attractive in the short and long term, in our opinion. According to our price analysis, the stock should catch support around $6 and again at $5.50. A close below $5.50 and the stock could test its 52-week low of $4.13. Short-term investors might consider cutting losses if APRN closes below $5.50.
On the upside, Wall Street has a consensus one-year price target of $9.53. (3) Some quick math here, that’s approximately $1.57 of downside and $2.97 of potential upside. Not exactly a $2 reward to $1 risk ratio, but close enough.
Analysts don’t see the company turning a profit this year or next but do forecast sales to increase from $485.66 million this year to $508.46 next year. (4) Based on price to sales (P/S), Blue Apron does offer prospective investors a discount to its peer group.
The typical APRN competitor trades at 0.95 sales, compared to 0.21 (as we type) for Blue Apron. (5) If the food and ingredients company traded up to the peer group numbers, Kozlowski shares would zoom to $33.60 based on 2022 forecasted revenue. That’s probably not going to happen.
Instead, let’s use APRN’s average P/S ratio since debuting as a publicly traded company in June 2017 to get a more reasonable look at its possible potential. Investors have paid an average of 0.445 times Blue Apron’s revenue since IPOing.
Here come the ifs, if APRN hits Wall Street’s 2022 consensus sales number and traded at its average price to sales ratio, then the stock would price out at $15.74 and more than double the money for the two insiders.
OUTLOOK: Blue Apron Holdings, Inc. (APRN) is a volatile stock and should only be considered by aggressive investors. At its current price and using a stop should the stock close below $5.50, the food company does appear to offer high-risk tolerant investors and attractive reward to risk ratio.
1 – https://www.secform4.com/insider-trading/1701114.htm
2 – https://www.secform4.com/insider-trading/1675052.htm
3 – https://finance.yahoo.com/quote/APRN?p=APRN
4 – https://finance.yahoo.com/quote/APRN/analysis?p=APRN
5 – https://finance.yahoo.com/quote/APRN/key-statistics?p=APRN