EVC, NLS, QPSA: Stocks with News and Insider Transactions

Entravision Communication (NYSE: EVC), Nautilus Inc (NYSE: NLS), and Quepasa Corporation (NYSE: QPSA) surged last week on positive developments. Incidentally, insiders are active in these stocks both on the long and short sides making it difficult to gauge clear winners and losers here:

Entravision Communication (NYSE: EVC) is a diversified Spanish-language media company that has television and radio operations in the United States, and the border markets of Mexico. Being a focused player, it has limited operations but enjoys relatively higher customer loyalty which eventually translates into better advertisement rates. The stock of this highly leveraged company remained on a downhill journey for most part of 2011. However, it started something of a turnaround in December last year announcing a special dividend and buying back notes. However, insiders, who have been very active in the stock in the recent past due to constantly declining prices, present a perplexing picture. Apart from automatic stock acquisitions which are linked to executive compensation, insiders have been net sellers. Nevertheless, the stock has shot up nearly 16 per cent in the last month. It appears better to stay away from this stock for the time being and wait for a better entry point.

Nautilus Inc (NYSE: NLS) shot up nearly 23 per cent in the previous week after declaring better than expected preliminary quarterly results. This fitness products company reported that its fourth quarter sales are expected to increase 12 per cent. Insiders probably had an inkling of what is coming and thus, turned bullish in the last three months or so. The stock’s average traded volume increased last week as investors lapped up shares in light of the upbeat forecast. At $2.3, the stock trades at a price earnings multiple of 57 but the same drops to a more reasonable 15 on a forward basis. This may appear a little overvalued to current prices, but robust earnings every quarter are likely to keep pushing the stock to higher levels. Since a sharp correction is ruled out, investors can accumulate it on every 405 per cent dip.

Quepasa Corporation (NYSE: QPSA) had a surprise rally of 33 per cent on Friday after it was reported that Facebook’s long awaited IPO is imminent. QPSA operates Quepasa.com, myYearbook.com, and Quepasa Games focused on the Latin audience. Being a conservative, I find the sharp appreciation in QPSA hard to digest, but the markets are seldom rational in euphoric times. This means the stock can further advance as reflected by its ‘market outperform’ rating given by Rodman & Renshaw that believes it can go to $7.