Roper (ROP) size insider buy on 6/10 from director Richard Wallman of 2,000 shares at $453.25, a more than $900,000 investment and largest open market buy in years. ROP is breaking out of a monthly bull flag to new all-time highs, a rare spot for a large open market purchase but showing a lot of confidence in the name. Shares have longer-term upside to $565. Recently, the pullback to the 10-EMA saw a nice hammer reversal and breakout here above $455. The $48.25B company trades 28.8X earnings, 8.45X sales, and 32.8X FCF with a small yield. ROP develops software and engineered products for niche industrial markets. Their key areas include software, measurement & analytical solutions, and process technologies.  They are benefitting from a recovery in many of their end-markets including architecture, engineering, creative and government contracting. ROP is also seeing accelerating recurring revenue growth from their software side including tailwinds from M&A deals last year include Vertafore, an insurance software solutions company. ROP has been actively cutting their debt and back on the hunt for deals with an actively managed, high-quality list of candidates to add to their portfolio and potential positive catalyst into the 2H. In April, they talked about size of potential targets:

“When you’re looking at the types of businesses that we look to buy, small market, vertically focused, leading software-type or software-type business models, I think the sweet spot in that is going to be somewhere in the $750 million to $1.5 billion range. It’s really about the target, the businesses that we target, right? Businesses that have higher organic growth than Roper has historically, businesses that have very good margins, often better than Roper, at least at the same level now that we’ve improved ours over many, many years. And then we buy those businesses. They grow. We hope — we believe we can make them better. They accelerate growth. They generate more cash, and you get this compounding effect. The good news is, as you get more and more into software and these types of opportunities, we find more and more companies that fit that model that will allow us to continue to improve all those metrics for many, many more years to come.”

Analysts have an average target for shares of $455 and a Street High $505. Barclays positive on organic growth opportunities while Argus says the company is well positioned for the post-pandemic future as its products enable work-from-home, environmental testing, and electronic surveillance. OpCo raising estimates citing easier Q2 organic comps, deleveraging, and a reasonable 2022 FCF multiple. Short interest is 1.2%. Hedge fund ownership rose 5.7% in Q1.