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Why Timothy Collins Likes Olo

Insider selling is tapering off, and recent acquisition move points to longer-term growth.
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Olo (OLO) - Get Olo, Inc. Class A Report is an industry-specific software company. Specifically it writes ordering and delivery programs for restaurants. And the company’s stock… well, that hasn’t been doing so well lately. 

“For this particular name, it is a third-time charm for me," Real Money's Timothy Collins wrote recently, adding "Well, I hope." 

As Collins noted, "Olo… has been the consummate underperformer ever since its lockup release. Since the late August spike to around $50, the stock has essentially been cut in half." 

The company recently announced it's buying Wisely, a customer intelligence and engagement platform for restaurants. "At $187 million, this deal isn't a small buy, but if OLO is going to become a real player in the space, reaching outside organic growth is the right move. It allows OLO to get in front of new clients and to get Wisely in front of OLO's clients. Additionally, it expands the capture of data, a key for OLO moving forward."

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Admittedly, the insider sales are a challenge to ignore when you see everyone in the C-suite selling something. It started on Sept. 13, and we've essentially seen a filing almost daily since that time. I understand insiders wanting to cash out some holders. Odds are they worked at market or below market rates with this incentive in place. This is quite common for companies that have yet to list publicly. I have to believe we are getting long in the tooth on the insider selling.”

So why shouldn’t investors follow suit? Because, as Collins writes, it’s pretty common for corporate leaders to sell their shares following a lockup release, and Olo is making some moves that look good for its long term prospects. All of which means that he actually thinks this one might look good going forward.

“Based on the action in the stock, it appears to be finding a bottom here ... we see price poking its head above recent resistance. The higher lows and higher highs during October in both the Full Stochastics indicator and the Moving Average Divergence Convergence indicator offer a nice bullish divergence. At some point, that will matter. "

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