RealPage (Nasdaq: RP) – is a software and data analytics firm with a specific focus on the United States real estate industry. The company’s products include property management solutions, accounting and maintenance management, back-office accounting, and rental property management solutions. RealPage is headquartered in Richardson, Texas and it was founded in 1998.

RealPage has seen its earnings grow by a rate of 36% per year over the last three years while sales have increased by 23% per year over the same time period.

The company saw earnings grow by 18% in the third quarter while sales were up 13%.

Analysts expect RealPage to show earnings growth of 16% for 2019 as a whole while sales are expected to increase by 13.1%. RealPage is scheduled to report fourth quarter results in mid-February.

The management efficiency ratings for the company are solid with a return on equity of 17.3% and a profit margin of 21.1%.

Sentiment toward RealPage shows there are nine analysts following the company at this point with six “buy” ratings and three “hold” ratings. This puts the buy percentage at 66.6% and that falls in the average range.

On the other hand, the short interest ratio is well above average at 15.88. There are over 7.2 million shares sold short and the average daily trading volume is approximately 450,000. If the stock rallies like I think it will, the short sellers could add buying pressure as they try to cover their positions.

Looking at the weekly chart we see that the stock was oversold based on the weekly stochastic readings, but the indicators made a bullish crossover in the last few weeks. The indicators have now left the oversold zone and are trending higher.

Something else that stood out from the chart is the similarities between last year and this year. The stock moved below its 104-week moving average in late 2018 and then rallied sharply to move back above its weekly moving averages. The stock has just moved back above its 13-week moving average and looks poised to rise in the coming months.

Suggested strategy: Buy RP with a maximum entry price of $58.50. I would set a target of at least $77.00 over the next 9 to 12 months. I would suggest a stop loss at the $51.00 level.

— Rick Pendergraft

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