Stocks That Should Surprise the Market: NovaGold Resources Inc. (NG), The Gap Inc. (GPS)

NovaGold Resources Inc. (AMEX: NG) shares are 18.08% up in the year-to-date (YTD) period and have moved -0.09% or -$0.01 lower in the latest trading session. However, stock’s trailing 12-month performance remains nearly +127.53% lower. Comparatively, the stock is -17.63% down YTD and 22.31% over the trailing 3-month period. If we look at the shorter duration, its week performance is 13.89% and 17.82% over the month.

Analyst Recommendations

On September 27, 2016, JP Morgan recommended the NG stock is a Overweight, while earlier, B. Riley FBR Inc. had Initiated the stock as a Buy on December 19, 2017. 0 of the 1 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 1 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $10.58. The forecasts give the NovaGold Resources Inc. stock a price target range of $30.00 on the higher side while at least one analyst think the stock could plunge to a low of $30.00. The two limits represent an upside potential of 64.73% or 64.73%.

Earnings Forecast

Analysts estimate the earnings to increase 25.00% in the current quarter to -$0.01, up from the -$0.02 reported in the same quarter a year ago. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.01 and -$0.01. Wall Street estimates earnings per share to be at an average of -$0.05 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 63 over the last 12 months, while SEC filings reveal that there have been 55 insider sales over the same period. Insiders have purchases 2,354,991 shares while those sold by company executives and officers stand at 2,021,656. The last 3 months have seen insiders trade a total of 2,298 and 0 in purchases and sales respectively.

Lang Gregory A., a President and CEO at the company, sold 81,032 shares worth $0.9 million at $11.05 per share on May 01. The President and CEO had earlier sold another 88,800 NG shares valued at $0.94 million on Aug 31. The shares were sold at $10.55 per share. Walsh Anthony P. (Director) sold 24,984 shares at $11.60 per share on Apr 16 for a total of $0.29 million while Ottewell David A., (Vice President & CFO) sold 34,525 shares on Apr 16 for $0.43 million with each share fetching $12.44.

The Gap Inc. (NYSE:GPS), on the other hand, is trading around $17.77 with a market cap of $6.58B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $11.11 and spell out a less modest performance – a -59.95% return. Some analysts are even forecasting -$2.1 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the The Gap Inc. (GPS) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

GPS’s operating margin was positive on the trailing 12 months basis, remaining steady at 4.10%, while the operating expenses over the recent quarter were at $1.08 billion. This represented a 67.15% of the company’s total revenues which amounted $3.27 billion. With this in place, we can see that the company’s diluted EPS declined -$0.17 on the year-over-year period, growing to $0.44 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Oct 2020), the total assets figure advanced to $13.72 billion from $12.71 billion over the previous quarter. Short term investments amounted to $25.0 million while total current assets were at $5.34 billion. The cash flow from operating activities totaled -$87.0 million, significantly lower than the $583.0 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$295.0 million.

Insider activity

Insiders have transacted a total of 49 times at The Gap Inc. over the last 6 months, with insider purchases undertaken 32 times and accounting for 11,116,507 shares. Insider sales totaled 125,576 shares over the same period, with these deals completed in 17 transactions. Looking at these numbers, we realize that net purchases over that period are 15.0 shares. Insiders now hold a total of 165.6M shares after the latest sales, with 0.80% net shares purchased.

Major holders

Insiders own 9.00% of the company shares, while shares held by institutions stand at 60.10% with a share float percentage of 207.92M. Investors are also buoyed by the number of investors in a company, with The Gap Inc. having a total of 612 institutions that hold shares in the company. The top two institutional holders are Dodge & Cox Inc with over 28.52 million shares worth more than $359.98 million. As of Jun 29, 2020, Dodge & Cox Inc held 7.64% of shares outstanding.

The other major institutional holder is Vanguard Group, Inc. (The), with the investment firm holding over 27.66 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $349.1 million and represent 7.41% of shares outstanding.