One good way to find investment opportunities is by looking to see what the smart money is doing at any given time. When corporate insiders or activist investors take a position in a company, it’s often a sign that investors should expect favorable developments going forward.
Heading into 2024, several interesting smart money stocks could pay off in spades. These are three of the top smart investment picks today.
Match Group (MTCH)
Match Group (NASDAQ:MTCH) is a tech company operating a variety of online dating sites and apps. Its holdings include Tinder, Hinge, Match.com and OkCupid.
MTCH stock has been breaking investors’ hearts over the past two years; shares are down as much as 76% from their 2021 highs. While some properties like Tinder have performed strongly, others, such as OkCupid, have not enjoyed much traction with users as of late. Analysts have increasingly questioned management’s strategic vision for the company.
However, it appears things could change in 2024. This week, activist investor Elliot Management announced it took a $1 billion position in MTCH stock.
Elliot has a long track record of successful activism in tech companies. Match, by all accounts, still has popular and successful apps. And shares trade for just 15 times forward earnings. With Elliot’s involvement, Match shares could be a smart trade for 2024.
Twilio (TWLO)
While tech stocks have rebounded as of late, many firms are still struggling to get back on track after the 2022 bust. Not surprisingly, with investors focused on profitability, activists are swirling at various software companies.
Like Match, Twilio (NYSE:TWLO) is a software company with a solid operating business that underperformed its potential in recent years.
Twilio has enjoyed a tremendous revenue growth trajectory, rising from $650 million in sales in 2018 to $3.8 billion in 2022 as developers flocked to the firm’s communications and customer engagement platform.
However, some analysts believe Twilio should be more profitable, and the firm has made suboptimal capital allocation solutions.
To that point, activist investor Legion Partners took a run at the company, demanding changes in its strategy. So far, that hasn’t yielded much. However, another firm, Anson Funds, took an activist stake of its own in November and is demanding changes as well. With so many players looking to improve Twilio’s operations, this could be a great smart money pick for 2024.
Dollar General (DG)
Another way to find smart money stocks is with insider buying. It’s often a good sign when management buys more shares. That’s especially true when a company is going through a crisis, and investor confidence has been shaken.
For example, there’s Dollar General (NYSE:DG). The discount retailer had a miserable year. DG stock collapsed amid a slowdown in sales; management blamed economic weakness among the firm’s core consumer base for the deceleration.
However, there were other issues as well. Investigative reports highlighted potentially unsafe working conditions at some Dollar General stores. And the company had trouble maintaining full staffing at some locations amid employee frustration.
There has been vigorous debate about the nature and extent of the company’s issues. However, management doesn’t seem too worried. Director Michael Calbert picked up more than $1.3 million in DG stock in June. And in September, Chief Information Officer Carman Wenkoff purchased $212,500 in DG shares as well.
In addition to the insider buying, Barclays (NYSE:BCS) recently upgraded DG stock to outperform and lifted its price target from $124 to $154. While the company still has challenges, the smart money is betting on Dollar General’s turnaround in 2024.
On the date of publication, Ian Bezek held a long position in DG stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
