Every investor wants an 'in', a hint that tells exactly what a stock is going to do and when. The kind of signal that cuts through the noise of the market and gives meaning to the deluge of raw data that every company generates. Multiply that data by 10,000 publicly traded stocks, and you have an idea of ??how daunting the markets can be.
It's tempting to follow an expert: a Wall Street analyst or a trading guru. They all have an important contribution to make. But here we'll take a look at some company insiders. These are names you probably haven't heard of as they have a lower profile. They are corporate officers, with a good understanding of their own businesses and business niches.
Insiders know what their company faces, based on their positions of social responsibility – responsibility to directors and shareholders, for bringing in profits and returns. That makes their trades a good place to look for solid purchases.
With this in mind, we turned our attention to three stocks with recent informative insider buys. When we ran the tickers through the Investing Insights platform, we found that all three had a 'Perfect 10' smart score score. Let's take a closer look.
Nicolet Bank Shares (NCBS)
We start with Nicolet Bankshares (NASDAQ:), a small regional bank holding company in Wisconsin. Its subsidiary, Nicolet National Bank, operates 30 branches in Wisconsin and Upper Michigan and offers a full range of personal and corporate banking solutions ranging from checking accounts and savings deposits to mortgages, wealth management and retirement services.
The company has posted healthy revenues and profits in the last 5 quarters, which continued in its latest quarterly statement. Nicolet reported 2Q21 EPS of $1.77 per share, based on net income of $18.2 million. The net was up 34% year-over-year, with EPS gaining 38% – beating the consensus by more than 8%. Revenue also came in ahead of The Street's forecast, up 13.8% from the same period a year ago to $55.75 million, a beat of $19.62 million. The company ended the first half of the year with total assets of $4.6 billion, of which $792 million was cash or cash equivalents.
Management prides itself on Nicolet having the most active acquisition record among Wisconsin banks – and in 1H21, the company made two pertinent announcements. First, Nicolet reached a firm agreement in April to acquire Mackinac Financial (NASDAQ:), a regional bank with $1.5 billion in assets. The deal closes in 3Q21, pending shareholder approval; regulatory approval has already been obtained.
Second, Nicolet entered into an agreement to acquire County Bancorp (NASDAQ:), a major Wisconsin agricultural lender. County will also bring $1.5 billion in assets to the company and the merger is expected to close in 4Q21. Both companies are now seeking shareholder and regulatory approval.
As for insiders, we see that the company's CFO, Hubert Moore, and a board member, Robert Weyers, have both made informational purchases in recent days. Moore spent more than $510,000 buying 7,000 shares, while Weyers's purchase was smaller, $253,000 for 3,500 shares.
Writing for Maxim (NASDAQ:), 5-star analyst Michael Diana considers the company's acquisition activity key.
“We believe that NCBS deserves a premium for its record of making acquisitions, the most recent of which was announced last month….Since 2016, NCBS has acquired Baylake Corp, First Menasha Bancshares and Choice Bancorp to acquire the To become the leading independent bank in the demographically attractive areas of Green Bay and the Fox Valley.The recently announced acquisitions of MFNC [Mackinac] and ICBK [County] should, in our view, continue NCBS's string of successful acquisitions," Diana wrote.
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Diana gives the stock a buy rating and a price target of $94, suggesting there is room for a 30% increase in the stock over the next year.
This small-cap banking firm has picked up 3 recent Wall Street ratings – and they all agree it's a stock to buy, making the consensus a unanimous Strong Buy. The shares are priced at $72.33 and their average price target of $89.33 implies upside potential of 23.5% over one year. (See NCBS stock analysis)
Geo Group (GEO)
Let's change the pace and move from banking to real estate. Geo Group (NYSE:) specializes in secure facilities and community return centers, in short, prisons and mental health facilities. The company works in all phases of the property – from design and development to financing and operation of the facilities, providing rehabilitation, post-release support, electronic monitoring and community services. The company is based in Florida and operates in North America, the UK, Australia and South Africa.
Geo Group reported $576.4 million in first-quarter revenue this year, a 4% year-over-year decline. While sales fell, revenues rose. Earnings per share came in at 41 cents, nearly double the 21 cents reported in the previous year's quarter.
In recent months, Geo Group has seen some negative headlines, including a contract non-renewal by the US Marshall Service for Detention Facilities in Queens, New York. The non-renewal of the Queens facility will incur a loss of $19 million in annual revenue. On a positive note, Geo Group continues to operate immigration and customs enforcement holding centers. The company carefully states that it does not operate ICE facilities involved in the detention of minors.
On the insider front we see a clear case of trust. CEO George Zoley spent $1,123 million in mid-June to raise 166,664 GEO shares.
Five-star analyst Joe Gomes sees in his coverage of GEO for Noble Capital that the company is solid, despite the loss of the contract.
"We continue to expect GEO to see continued recovery from the COVID effects throughout the year. Management guidance includes the impact of the loss of the BOP contracts, but only the loss of the USMS Queens- These negatives are partially offset by the activation of ICE (NYSE:) facilities at the end of 2020, which should reach normalized operations during 2021,” said Gomes.
The analyst summed up: “GEO stocks offer a favorable risk-reward opportunity in our view. While COVID and political rhetoric remain headwinds, we believe the company's real estate assets and high-quality contracts will ultimately be valued appropriately .”
To that end, Gomes gives GEO stock an Outperform (i.e., Buy) rating along with a price target of $15. Investors could be sitting on a ~100% gain, should Gomes' forecast turn out as expected.
In general, GEO's two most recent ratings are a buy and a hold, leading the analyst consensus to view a moderate buy. The stock is priced at $7.52 and the price target of $11.63 implies 55% growth potential over the next 12 months. (See GEO stock analysis)
IMARA (IMRA)
Last but not least is Imara (NASDAQ:), a clinical-stage biopharmaceutical company engaged in research into hemoglobinopathies. In particular, the company has a drug candidate in the pipeline for the treatment of sickle cell disease and beta-thalassemia. These are two blood disorders – both sets of related diseases – that cause anemia symptoms; Sickle cell disease is a genetic disorder that causes malformed red blood cells and can lead to serious quality of life problems and a shortened lifespan, while beta thalassemia is a hemoglobin disorder, also hereditary, that reduces the blood's ability to carry oxygen. No set of diseases currently has a completely effective treatment.
The lead drug candidate in IMARA's pipeline, IMR-687, is a selective and potent small molecule that inhibits PDE9. PDE9, in turn, plays a role in lowering cGMP levels in patients with blood disorders, with associated inflammation, decreased blood flow, and other symptoms. Blocking PDE9 has been linked to reactivation of fetal hemoglobin – resulting in a reduction in symptoms.
In June, IMARA reported final data from a Phase 2a clinical trial of IMR-687 in sickle cell disease, which showed a significantly lower annual rate of vaso-occlusive (blood flow-blocking) crises (VOCs) in patients. New patients starting the drug also showed a longer time to first VOC. IMR-687 was also well tolerated by patients both as monotherapy and in combination with hydroxyurea.
In insider trading, the most significant trade from an investor's perspective was made in late July by board member Mark Chin. Chin bought 1,333 million shares for nearly $8 million. Chin's stake in the company now totals over $13.5 million.
Leerink analyst Joseph Schwartz is optimistic about IMRA and takes a long-term view when assessing the company's prospects.
"While IMRA stock has been under pressure this year, we believe encouraging Ph.2a VOC data should give stock a boost today ahead of Ph.2b interim data to be released in 2H21. expected… Ahead of the interim Ph.2b ARDENT and FORTE data in 2H21, we reiterate our OP review on IMRA," Schwartz wrote.
The analyst added: "We currently estimate peak gross sales of ~$2.8 billion (2035E) and ~$290 million (2035E) for IMR-687 in SCD and ?-thalassemia, respectively. We take into account clinical and regulatory risks in our probability of success (PoS) estimates, which range from 60%/40% in SCD (US/EU) to 40%/20% in thalassemia (US/EU).”
To this end, Schwartz gives IMRA stock a price target of $42, indicating genuine confidence, and an impressive upside potential of 661% from the current share price.
In general, IMRA has received two recent buy recommendations from the analysts, for an average buy consensus valuation. (See IMRA stock analysis)
For more ideas for stock trading at attractive valuations, visit Investing Insights.
