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3 stocks flashing signs of strong insider buying
Sometimes the best investment strategy is to follow a leader. And corporate insiders have long been popular leaders. Their combination of responsibility to their shareholders and access to information about their companies under cover gives an air of authority to their personal investment decisions. The most important thing about these insiders is that they are expected to guard their businesses whatever they do for profitability. Shareholders want a return on investment, boards of directors want accountability, and company officers adhere to both standards. If they start buying up shares in their own company, it is a sign that investors should do further research. To improve the playing field, regulators have required insiders to publish their stock trades on a regular basis, making it an easy matter for investors to follow. Better yet, TipRanks gathers the information on the Insiders’ Hot Stocks page, providing tools and data filters that make it easy to search raw data. We picked three stocks with recent informative purchases to show how the data works for you. Del Taco Restaurants (TACO) We’re starting with the popular Del Taco, the California-based taco chain. Del Taco has a market cap of $ 344 million, over 600 restaurants, and a loyal following, making it a solid foundation in the fast food franchise market. Most of the company’s locations are west of the Mississippi, but the company has made its way into the eastern United States. Like many stationary, traffic-dependent companies, Del Taco has had a rough year. The coronavirus crisis had dampened traffic, and social and economic lockdown measures have reduced income streams. However, the company has started to recover. After heavy net losses earlier in the year, EPS returned to positive numbers and third-quarter sales of $ 120 million increased more than 15% sequentially. The share price, which fell by two-thirds at the height of the economic crisis last winter, has regained its losses. TACO is now trading at 17% for the year. Insiders are optimistic about the stock. The most recent purchase, which helps set the sentiment needle in positive territory, comes from board member Eileen Aptman, who bought 88,952 shares and spent over $ 650,000. Wedbush analyst Nick Setyan reports on Del Taco and rates the stock as outperforming (ie buying). His $ 13 shows the level of his confidence, indicating 40% growth. (To see Setyan’s track record, click here.) Setyan wrote, “We believe that TACO’s current valuation is based on an overly pessimistic view of medium to long term fundamentals in a post-COVID QSR environment that conservative comp, unit growth and margin assumptions estimate EPS growth of 12% in 2022 by 2022. We estimate that 1% of the incremental comp equals an incremental EPS of $ 0.04-0.06, and every 10 basis points of the incremental margin equals $ 0.01 incremental EPS in our model. “Overall, there is little action on the road towards Del Taco right now, with only one other analyst getting involved on the stock. An additional hold rating means that TACO qualifies as a moderate purchase. The average target price is $ 11 and implies a potential gain of ~ 19%. (See TACO stock analysis on TipRanks.) CuriosityStream (CURI) Next up is CuriosityStream, an online video streaming channel in the education segment. CuriosityStream specializes in factual video content and offers subscription services. The channel has over 13 million subscribers worldwide. Its founder, John Hendricks, first rose to fame in 1985 with the Discovery Channel, a cable television channel devoted to similar themes. New to the public markets, CuriosityStream was floated earlier this year through its merger with Software Acquisition, a special-purpose acquisition company (SPAC) was formed as a blank check company to close the deal. It’s no surprise that insiders are making large purchases in new stocks, but the moves on CuriosityStream deserve attention. John Hendricks made three large purchases earlier this month, buying blocks of 15,473 shares, 26,000 shares, and 11,684 shares in four days. Hendricks paid $ 473,561 for the new shares. Analyst Zack Silver reported on B. Riley stock: “We see CURI as well positioned to capitalize on the burgeoning global streaming market by establishing ourselves as a no-nonsense programmer for the post-TV era. CURI’s subscription video-on-demand (SVOD) service differs not only in the sheer volume of curated factual titles available on the platform, but also in its compelling price. We anticipate that CURI’s strategy of monetizing its content across multiple revenue streams will allow for a more efficient way to scale… “Silver rates the stock at a buy, and its price target of $ 16 implies a 40% uptrend for a year. (To view Silver’s track record, click here.) CURI has a moderate buy analyst consensus rating based on 2 recent buy ratings. The average target price is $ 14, which suggests this stock can grow ~ 23% from its current trading price of $ 11.50. (See CURI stock analysis on TipRanks) Allegheny Technologies (ATI) Last but not least, Allegheny Technologies, a metallurgy company based in Pittsburgh, Pennsylvania. Allegheny has two divisions: High Performance Materials & Components, specializing in titanium and nickel-based alloys, and Advanced Alloys & Solutions, which include stainless steels and specialty steels, electrical steels, duplex alloys, and zirconium, hafnium and niobium alloys. The company’s metal technology is used in the electrical, automotive, aerospace, and oil and gas industries. Allegheny’s sales and shares have declined this year as the company was hit by the corona crisis. Disruptions in supply chains, sales networks and customer orders have had just as negative effects as social and economic shutdown measures. Quarterly revenue decreased 37% from $ 955 million in the first quarter to $ 598 million in the third quarter. Shares are down 21% since the start of the year. All of this seems to make ATI a poor stock pick, but the company used the time to save wisely and realign its production models. British analyst Josh Sullivan pointed out that earlier this month he changed his stance from neutral to buy. He wrote: “We are converting ATI to buy from hold after the company’s planned exit from stainless raw materials. This move changes ATI’s historical risk profile by removing the most volatile industry. Separating from ATI’s stainless steel legacy has been a long-awaited investor goal. The exit will also allow ATI to avoid maintenance work and possible overbuilding of inventory during the recovery phase. In addition, Sullivan notes that business in the aerospace industry is likely to recover soon, which brings Allegheny a boon: “With the 737-MAX back up and running, the upward pressure on Airbus A320 production and vaccines available as well as stronger focused ATI aerospace core correlate directly with an aviation recovery. “Sullivan’s Buy recommendation includes a price target of $ 21, which implies room for 27% growth over the next 12 months. (To see Sullivan’s track record, click here.) Turning to insider trading, we find that the company’s CFO and SVP, Donald Newman, bought 12,500 shares this month and paid over $ 210,000 for the block. He now holds 80,042 shares valued at $ 1.3 million. Overall, Allegheny receives a consensus rating for moderate buys, based on an even split between 4 reviews, 2 buys and 2 holds. The share price is $ 16.32, and the average target price of $ 18.25 implies an upside of ~ 12%. (See ATI stock analysis on TipRanks.) Good ideas for trading stocks at attractive valuations can be found at TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ insights into stocks. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.