In this article, we discuss the 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management based on Q2 holdings of the fund.
Phil Frohlich formed Prescott Group Capital Management in 1992. Phil Frohlich earned a bachelor’s degree in economics from the University of Oklahoma, an MBA from the University of Texas at Austin, and a law degree from the University of Tulsa. He is an Investment Advisor Representative with Prescott Group Capital Management in Tulsa, OK, with over 19 years of financial expertise.
Oklahoma-based Prescott Group Capital Management is a registered investment advisor. Through private limited partnerships, the hedge fund invests in publicly listed stocks with small and mid-capitalization. The hedge fund handled more than $500 million in assets as of June 30, 2021. In the second quarter of 2021, the total value of the Prescott Group Capital Management 13F portfolio is $353.65 million.
Phil Frohlich’s stock picks include Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT).
Prescott Group Capital Management owns 6,000 shares in Microsoft Corporation (NASDAQ: MSFT), worth $1.63 million. On September 8, Jefferies analyst Brent Thill raised the price target on Microsoft Corporation (NASDAQ: MSFT) to $345 from $335 and kept a “Buy” rating on the shares.
Based on the latest 13F holdings for the second of 2021, Prescott Group Capital Management owns 9,500 shares in NVIDIA Corporation (NASDAQ: NVDA), after increasing its holding in the company by 90% from the first quarter of 2021. On August 20, Benchmark analyst David Williams initiated coverage of NVIDIA Corporation (NASDAQ: NVDA) with a “Buy” rating and gave a price target of $230.
Phil Frohlich also owns 5,294 shares in Walmart Inc. (NYSE: WMT), worth $747,000. On September 2, Walmart Inc. (NYSE: WMT) posted earnings for the second quarter of 2021. It reported earnings per share of $1.78, surpassing the estimates by $0.21. On August 18, Cowen analyst Oliver Chen raised the price target on Walmart to $175 from $170 and maintained an “Outperform” rating on the shares.
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Why should we care about Prescott’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Here is a list of Phil Frohlich’s Prescott Group Capital Management stock picks in 2021. We used Frohlich’s 13F portfolio for Q2 2021 for this analysis.
Stocks to Buy Today According to Phil Frohlich’s Prescott Group Capital Management
10. NVR, Inc. (NYSE: NVR)
Frohlich’s Stake Value: $6,237,000
Percentage of Phil Frohlich’s 13F Portfolio: 1.76%
Number of Hedge Fund Holders: 28
NVR, Inc. (NYSE: NVR) functions as a homebuilder in the United States. The company was founded in 1980, and it stands tenth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
On July 21, NVR, Inc. (NYSE: NVR) announced earnings for the second quarter of 2021. It posted earnings per share of $82.45, beating the estimates by $7.74. Revenue over the period was $2.22 billion, up 39.6% year over year, surpassing the estimates by $10 million. On June 10, Zelman analyst Alan Ratner downgraded NVR, Inc. (NYSE: NVR) to “Hold.” In May, the homebuilder survey conducted by Zelman & Associates revealed a fourth consecutive month of lower-than-seasonal order activity.
In the second quarter of 2021, Phil Frohlich’s Prescott Group Capital Management owned 1,254 shares in NVR, Inc. (NYSE: NVR), worth $6.24 million. This represented 1.76% of the investment portfolio of Prescott Group Capital Management. Ric Dillon’s Diamond Hill Capital is a leading shareholder in NVR, Inc. (NYSE: NVR), with 118,565 shares worth $589.66 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to NVR, Inc. (NYSE: NVR) amid the company’s long-term growth potential.
Black Bear Value Partners, in its second-quarter 2021 investor letter, mentioned NVR, Inc. (NYSE: NVR). Here is what the fund said:
“I would point you to our Q1 letter to read our discussion of NVR. We own 3 homebuilding related names which comprise a healthy chunk of the portfolio. Given the concentrated nature of the portfolio I am going to keep the names of the remaining 2 companies out of this discussion. 2 of the 3 companies are homebuilders while the 3rd is in an adjacent business line supplying the homebuilding industry.…” (Click here to see the full text)
9. Rattler Midstream LP (NASDAQ: RTLR)
Frohlich’s Stake Value: $6,494,000
Percentage of Phil Frohlich’s 13F Portfolio: 1.83%
Number of Hedge Fund Holders: 7
Rattler Midstream LP (NASDAQ: RTLR) is a West Texas-based midstream and energy-related infrastructure company that owns, operates, develops, and acquires midstream and energy-related infrastructure assets. It was incorporated in 2018 and ranks ninth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
On August 13, Barclays analyst Christopher Tillett downgraded Rattler Midstream LP (NASDAQ: RTLR) to “Underweight” from “Equal Weight” and gave a price target of $11 down from $12. On August 12, Rattler Midstream LP (NASDAQ: RTLR) declared a quarterly dividend of $0.25 per share, a 25% increase from the previous dividend of $0.20.
The hedge fund managed by Phil Frohlich’s owns 594,734 shares in Rattler Midstream LP (NASDAQ: RTLR), worth over $6.49 million, representing 1.83% of their portfolio. The hedge fund has decreased its stake in the firm by 43% in the second quarter of 2021. The biggest stakeholder of the company is Cardinal Capital, with 3.37 million shares, worth $36.77 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to Rattler Midstream LP (NASDAQ: RTLR) amid the company’s long-term growth potential.
8. Skechers U.S.A., Inc. (NYSE: SKX)
Frohlich’s Stake Value: $6,560,000
Percentage of Phil Frohlich’s 13F Portfolio: 1.85%
Number of Hedge Fund Holders: 35
Skechers U.S.A., Inc. (NYSE: SKX) is a lifestyle and performance footwear business based in the United States. It was founded in 1992 and is placed eighth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
On July 23, B. Riley analyst Susan Anderson raised the price target on Skechers U.S.A., Inc. (NYSE: SKX) to $61 from $51 and reiterated a “Buy” rating on the shares. On July 22, Skechers U.S.A., Inc. (NYSE: SKX) posted earnings for the second quarter of 2021. It reported earnings per share of $0.88, beating the estimates by $0.38. Revenue over the period was $1.66 billion, up 127.6% YoY, exceeding the analysts’ expectations by $170 million.
Prescott Group Capital Management holds 131,641 shares in Skechers U.S.A., Inc. (NYSE: SKX), worth over $6.56 million, representing 1.85% of their portfolio. Hedge fund sentiment increased for Skechers U.S.A., Inc. (NYSE: SKX) in the second quarter of 2021. Insider Monkey’s data shows that 35 elite hedge funds held stakes in the company in the second quarter, up from 29 funds a quarter earlier.
7. Plains GP Holdings, L.P. (NASDAQ: PAGP)
Frohlich’s Stake Value: $6,617,000
Percentage of Phil Frohlich’s 13F Portfolio: 1.87%
Number of Hedge Fund Holders: 15
Plains GP Holdings, L.P. (NASDAQ: PAGP) owns and manages midstream energy infrastructure in Canada and the US. It was incorporated in 2013 and stands seventh on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management. Plains GP Holdings, L.P. (NASDAQ: PAGP) shares have offered investors returns exceeding 45.63% over the course of the past 12 months.
On August 26, Plains All American Pipeline, L.P. (NASDAQ: PAA) and Plains GP Holdings, L.P. (NASDAQ: PAGP) announced that PAA’s two credit facilities had been renewed and extended. In addition, the company announced that it issued $1.35 billion senior unsecured notes due April 2026, whose principal amount is $1.35 billion. The new facilities are a $1.35 billion senior unsecured revolving credit facility with an initial term of August 2026 and a $1.35 billion senior secured hedged inventory facility with an initial maturity of August 2024. The funds will be used for general corporate purposes, and they will replace PAA’s previous credit facilities. On July 13, Citi analyst Timm Schneider raised the price target on Plains GP Holdings, L.P. (NASDAQ: PAGP) to $13 from $11 and kept a “Buy” rating on the shares.
Prescott Group Capital Management handles 554,217 shares of Plains GP Holdings, L.P. (NASDAQ: PAGP), worth $6.62 million. This represented 1.87% of the investment portfolio of Group Capital Management. The hedge fund has raised its stake in Plains GP Holdings, L.P. (NASDAQ: PAGP) by 64% in the second quarter of 2021. Arrowstreet Capital is the company’s most significant stakeholder, with 2.45 million shares worth $29.24 million.
In addition to Microsoft Corporation (NASDAQ: MSFT), NVIDIA Corporation (NASDAQ: NVDA), and Walmart Inc. (NYSE: WMT), analysts are paying attention to Plains GP Holdings, L.P. (NASDAQ: PAGP) amid the company’s long-term growth potential.
6. Ocwen Financial Corporation (NYSE: OCN)
Frohlich’s Stake Value: $7,325,000
Percentage of Phil Frohlich’s 13F Portfolio: 2.07%
Number of Hedge Fund Holders: 10
Ocwen Financial Corporation (NYSE: OCN) is a financial services firm. It was founded in 1988 and is placed sixth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management. Ocwen Financial Corporation (NYSE: OCN) shares have offered investors more than 60.28% in returns over the course of the past 12 months.
On September 9, B. Riley initiated coverage of Ocwen Financial Corporation (NYSE: OCN) with a “Buy” rating and gave a price target of $50. On August 5, Ocwen Financial Corporation (NYSE: OCN) announced earnings for the second quarter of 2021. It reported earnings per share of -$1.19, missing the estimates by $1.17. Revenue for the second quarter was $265.45 million, missing the forecast by $39.63 million.
Phil Frohlich’s Prescott Group Capital Management increased its holding in Ocwen Financial Corporation (NYSE: OCN) by 42% in the second quarter of 2021. The fund owns 236,428 shares of Ocwen Financial Corporation (NYSE: OCN), worth $7.33 million. Howard Marks’ Oaktree Capital Management is Ocwen Financial Corporation (NYSE: OCN) most significant stakeholder, with 596,870 shares worth $18.49 million.
5. NVIDIA Corporation (NASDAQ: NVDA)
Frohlich’s Stake Value: $7,601,000
Percentage of Phil Frohlich’s 13F Portfolio: 2.14%
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ: NVDA) is an American multinational technology company. It was founded in 1993 and is placed fifth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
The hedge fund managed by Phil Frohlich owns 9,500 shares in NVIDIA Corporation (NASDAQ: NVDA), worth over $7.60 million, representing 2.14% of their portfolio. Prescott Group Capital Management has increased its stake in the firm by 90% in the second quarter of 2021. Hedge fund sentiment increased for NVIDIA Corporation (NASDAQ: NVDA) in the second quarter. Insider Monkey’s data shows that 86 elite hedge funds held stakes in the company in the second quarter, up from 80 funds a quarter earlier.
Baron Opportunity Fund, in its second quarter of 2021 investor letter, mentioned NVIDIA Corporation (NASDAQ: NVDA). Here is what Baron Opportunity Fund has to say about NVIDIA Corporation in its letter:
“NVIDIA Corporation is a fabless semiconductor company and a leader in gaming cards and accelerated computing chips. Shares of NVIDIA rose in the second quarter on financial results and guidance significantly above Street expectations, as it benefited from the upgrade cycle in its gaming franchise along with continued AI-related strength driving its data center segment. NVIDIA’s total revenues of $5.66 billion beat Street expectations by $266 million, growing 84% (including the benefit of acquisitions, 65% organic), with its gaming business growing over 100% and its data center business expanding nearly 80%. We remain confident in NVIDIA’s leading position in gaming, data centers, and autonomous machines.”
4. Cloudflare, Inc. (NYSE: NET)
Frohlich’s Stake Value: $8,280,000
Percentage of Phil Frohlich’s 13F Portfolio: 2.34%
Number of Hedge Fund Holders: 43
Cloudflare, Inc. (NYSE: NET) is a cloud platform that provides a variety of network services to companies worldwide. It was incorporated in 2009 and stands fourth on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
On August 11, Cloudflare, Inc. (NYSE: NET) announced that it issued 0% senior unsecured notes due August 15, 2026, whose principal amount is $1.125 billion. In addition, initial bidders were allowed to buy up to an additional $168.75 million worth of notes. Cloudflare, Inc. (NYSE: NET) intends to use around $75 million of the net proceeds to cover the cost of capped call transactions, with the remainder going to general corporate purposes. On August 6, RBC Capital analyst Matthew Hedberg raised the price target on Cloudflare, Inc. (NYSE: NET) to $130 from $100 and kept an “Outperform” rating on the shares.
The hedge fund managed by Phil Frohlich owns 78,228 shares in Cloudflare, Inc. (NYSE: NET), worth over $8.28 million, representing 2.34% of their portfolio. Prescott Group Capital Management has decreased its stake in the firm by 41% in the second quarter of 2021. Cloudflare, Inc. (NYSE: NET) saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions reduced to 43 in the second quarter of 2021, compared to 45 positions in the previous quarter.
Alger, in its second-quarter 2021 investor letter mentioned Cloudflare, Inc. (NYSE: NET). Here is what the fund said:
“Cloudflare provides a broad range of network services to businesses of all sizes across the world. Cloudflare’s intelligent global network spans more than 200 cities in over 100 countries. It offers network security, performance and reliability to a growing portion of global web traffic with over 17% of global internet requests going through Cloudflare. The company’s serverless network design allows this global network to be a key component layer as new developments for edge computing, 5G and the Internet of Things increase the importance of secure, reliable edge networks.
Cloudflare stock outperformed in the second quarter following a strong earnings report for the first three months of this year during which the company reaccelerated revenue growth. This revenue reacceleration was driven by momentum in Cloudflare’s large customer segment. Cloudflare added a record number of large customers who now account for more than half of Cloudflare’s total revenue. We think that Cloudflare is currently still in the early stages of market penetration, which means it has potential to maintain high levels of growth within its large customer segment as the company continues to innovate within its product offerings to better serve these large, complex customers. Cloudflare’s leadership in product innovation was further validated by the company’s second quarter announcement of a new partnership with NVIDIA Corporation to develop Al-based applications on Cloudflare’s edge network.”
3. Nature’s Sunshine Products, Inc. (NASDAQ: NATR)
Frohlich’s Stake Value: $13,453,000
Percentage of Phil Frohlich’s 13F Portfolio: 3.8%
Number of Hedge Fund Holders: 11
Nature’s Sunshine Products, Inc. (NASDAQ: NATR) primarily makes and distributes nutritional and personal care products. The company was founded in 1972 and is placed third on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management. Phil Frohlich’s bet on Nature’s Sunshine Products, Inc. (NASDAQ: NATR) is also paying off. Shares of the company surged 25.35% over the last 12 months.
On August 5, Nature’s Sunshine Products, Inc. (NASDAQ: NATR) announced earnings for the second quarter of 2021. It posted earnings per share of $0.32, compared to the earnings per share of $0.20 for the first quarter of 2021. Revenue for the second quarter was $109 million, up 24.9% YoY.
Phil Frohlich’s Prescott Group Capital Management holds 774,468 shares of Nature’s Sunshine Products, Inc. (NASDAQ: NATR), worth $13.45 million. Overall, hedge funds are loading up on Nature’s Sunshine Products, Inc. (NASDAQ: NATR), as 11 out of 873 funds tracked by Insider Monkey held stakes in the company in the second quarter of 2021, compared to 9 funds a quarter earlier.
2. Civeo Corporation (NYSE: CVEO)
Frohlich’s Stake Value: $15,036,000
Percentage of Phil Frohlich’s 13F Portfolio: 4.25%
Number of Hedge Fund Holders: 10
Civeo Corporation (NYSE: CVEO) is a global corporation that provides lodging services in the United States. The company was founded in 2013, and it stands second on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management.
On July 30, Civeo Corporation (NYSE: CVEO) declared earnings for the second quarter of 2021. It posted earnings per share of -$0.03, beating the anticipation by $0.06. Revenue for the second quarter was $154.2 million, up 34.4% YoY.
The hedge fund chaired by Phil Frohlich owns 844,722 shares in Civeo Corporation (NYSE: CVEO) worth $15.04 million, representing 4.25% of their investment portfolio. According to our database, the number of Civeo Corporation (NYSE: CVEO) long hedge funds positions increased in the second quarter of 2021. There were 10 hedge funds that hold a position in Civeo Corporation (NYSE: CVEO) compared to 9 funds in the first quarter of 2021. Murray Stahl’s Horizon Asset Management is the company’s most significant stakeholder, with 3.58 million shares worth $61.55 million.
1. Performant Financial Corporation (NASDAQ: PFMT)
Frohlich’s Stake Value: $47,045,000
Percentage of Phil Frohlich’s 13F Portfolio: 13.3%
Number of Hedge Fund Holders: 10
Performant Financial Corporation (NASDAQ: PFMT) offers technology-enabled audit, recovery, outsourcing customer, and associated analytics services. The company was incorporated in 1976 and is ranked first on the list of 10 stocks to buy today according to Phil Frohlich’s Prescott Group Capital Management. Shares of Performant Financial Corporation (NASDAQ: PFMT) surged 511.64% in the past 12 months.
On August 17, Performant Financial Corporation (NASDAQ: PFMT) announced that it launched an underwritten offering in which it publicly offered 10.525 million common stock shares. The net proceeds from the public offering will go towards general corporate purposes and for working capital. On July 7, Craig-Hallum analyst George Sutton initiated coverage of Performant Financial Corporation (NASDAQ: PFMT) with a “Buy” rating and gave a price target of $10.
Prescott Group Capital Management holds 12.55 million shares in Performant Financial Corporation (NASDAQ: PFMT), worth $47.05 million, making it the leading shareholder of the company. Performant Financial Corporation (NASDAQ: PFMT) saw an increase in hedge fund sentiment recently. The number of hedge fund positions increased to 10 in the second quarter of 2021 compared to 7 positions in the previous quarter.
You can also take a peek at Top 10 Stocks to Buy Today According to Stephen Perkins’ Toronado Partners and 10 Best Defensive Stocks to Buy Today According to Billionaire Ken Fisher
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Disclosure: None. 10 Stocks to Buy Today According to Phil Frohlich’s Prescott Group Capital Management is originally published on Insider Monkey.
