Say "insider trading", and most people will immediately think of shady market movements and dishonest sellers, or maybe Martha Stewart, who was famously convicted of illegal insider trading after getting a stock tip about a biopharma company.
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But there is much insider trading that can be conducted based on information in the public place, even if it is well known, especially among corporate officers or business leaders. In that case, as long as the insiders publish their trades in a timely manner, in accordance with SEC rules, the insider trades are perfectly legal.
The SEC rules do not make insiders 'knowledge more readily available, but they do make insiders' transactions easy to track. And tracking company officials to see what trades they make and when can be a viable strategy for retail investors.
With this in mind, we have identified three stocks that show recent – and informational – insider purchases. As if that wasn't enough, all three stocks have a "Perfect 10" from the Investing Insights .
The platform gives each stock a one-digit score, based on the sum of 6 separate factors. The factors used are known to correlate with future overperformance; when they line up, this is a strong indicator for buyers to be aware of. Let's take a closer look.
Fiserv, Inc. ( FISV )
We will start with Fiserv (NASDAQ :), a financial technology company that provides services to banks, credit unions, brokers, finance companies and retailers. The company's products include payment services, account and billing solutions, customer management and online banking, risk compliance tools and data analysis. In short, Fiserv is a full-service fintech, with clients in a wide variety of sectors, including banking, government, healthcare, insurance, telecom and utilities.
After Fiserv saw revenues fall in 1H20, he returned in the second half. Sales were $ 3.79 billion for Q3 and $ 3.83 billion for Q4; Full year revenues for 2020 were $ 13.9 billion. While these were considered solid numbers and exceeded expectations, the impact of the coronavirus was felt in year-over-year declines. However, revenues fared better. Fiserv posted earnings of $ 4.42 per share in 2020, up 12% from the previous year.
As far as the insider is concerned, the "informational purchase" here was made by Denis O'Leary, director and chairman of the board of directors at Fiserv. O'Leary spent $ 1.01 million on 9,100 shares of FISV.
As for the analyst community, Mizuho's Dan Dolev believes the company has a lot to offer and has a bright future ahead.
“After a clear organic outperformance from peers in 2020, we see FISV on track to impress again in 2021, with strong growth across the board … Investors often view FISV as a legacy operator with less analytical capabilities than next-generation companies. We don't think this is true… FISV uses advanced analytics to measure every customer interaction and invests in automation to improve engagement. Although "the journey never ends," FISV notes already strong success in these efforts, with only a low single digit at the senior level, ”noted Dolev.
In line with his optimistic approach, Dolev views FISV as a buy, and his $ 160 price target implies a 38% rise for the coming year.
In total, no less than 19 reviews have been registered for Fiserv, and they split 17 by 2 in favor of Buys versus Holds. This indicates a broad view on Wall Street that the stock is a buy proposal, and makes the consensus assessment a strong buy. The stock is priced at $ 115.80, and their average price target of $ 134 suggests room for ~ 16% growth over the one-year horizon. (See FISV Stock Analysis)
Dominion Energy, Inc. ( D )
Next is an energy company. Dominion Energy (NYSE 🙂 of Richmond, Virginia has its hands in the electricity and natural gas industries, with electricity customers in Virginia and Carolina as well as natural gas customers in West Virginia, Ohio, Pennsylvania, the Carolinas and Georgia. along with parts of Utah to the west.
The past year has been bad for Dominion, and earnings per share are down from 2019. In the recently reported fourth quarter, the company reported GAAP earnings of 82 cents a share, a significant 32% lower than its $ 1.21 reported in 4Q19. Full year earnings showed a worse picture, with a net loss of 57 cents per share compared to earnings per share of $ 1.62 in 2019.
Although Dominion posted losses in 2020, the company did not attribute those losses to the corona crisis. The company previously noted several business factors that weighed on profits: costs associated with the planned retirement of Virginia power plants; cancellation of the Atlantic Coast Pipeline project; and lost business as a result of the sale of the gas transmission and storage segment of the business. These are all one-time costs and in some ways provide the long-term benefit of streamlining business. Dominion brought full-year 2021 earnings in the range of $ 3.70 to $ 4.00 per share.
Despite the mixed 2020 results, Dominion has seen some recent insider purchases pushing insider sentiment into positive territory. President and CEO Robert Blue spent nearly $ 1 million on 14,442 shares of Dominion, while Board member Mark Kington made a smaller purchase of 2,000 shares and paid $ 138,578
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Dominion has also scored fans within the analyst community. JPMorgan (NYSE 🙂 JPM analyst Jeremy Tonet relates to Dominion Energy and sees strength for the company in the light of its ability to withstand the political winds and transition to non-fossil fuel operations.
"With 52% of Dominion growth attributed to carbon-free investments, D & # 39; s influence on the 'green rate of change' is leading most peer utilities and would lead to a multiple revaluation over time. Importantly, the VA regulatory construction limits the risk of D & # 39; s offshore wind projects compared to other industry participants, given the assumption that costs are cautious, & # 39; & # 39; Tonet wrote. .
To this end, Tonet D rates an Overweight (i.e. buy) and sets a target price of $ 87 on the stock, which is a 15% rise for the coming year.
The 6-to-2 breakdown in recent stock reviews, in favor of Buy versus Hold, shows that Wall Street generally agrees with Tonet here, and makes the analysts judge the consensus of a Strong Buy. Shares in D are priced at $ 73.21, and their average price target of $ 81.50 suggests an 11% rise from that level. (See Dominion Stock Analysis)
Biohaven Pharmaceutical Holding ( BHVN )
We go from energy to the pharmaceutical sector. Biohaven Pharmaceutical Holding (NYSE 🙂 focuses on neurological and neuropsychiatric diseases, and has a pipeline of therapies in various stages of development and one that has already been approved by the FDA.
Last year, Biohaven & # 39; s NURTEC received approval for the acute treatment of migraines in adults and has been performing well since launch. The treatment has another emerging catalyst on the horizon. The FDA has accepted an sNDA (Supplemental New Drug Application) for migraine prevention, and a PDUFA date is expected in the second quarter.
As for insider trading, on March 2, John Childs, one of the company's directors, paid $ 851,370 for a block of 10,000 shares.
His display of confidence has the support of H.C. Douglas Tsao from Wainwright. The five-star analyst expects NURTEC's US approval for migraine prevention, followed by an immediate launch. Tsao is also impressed by NURTEC's “continued linear growth”.
"Despite only being on the market for about a year, NURTEC continues to take share of triptans and even mAbs used in preventive treatments, although the share is still relatively small, indicating sufficient room for growth", Tsao said. "Importantly, the attitude of neurologists and patients towards Nurtec is overwhelmingly positive: 58% of patients are satisfied compared to only 37% on Ubrelvy, again suggesting strong growth potential based on the best properties of the drug."
Accordingly, Tsao has a Buy rating for BHVN stock, in addition to a target price of $ 111. This figure implies a 43% increase from current levels.
Biohaven also has a lot of support among Tsao & # 39; s colleagues. The analysts' consensus rates the stock as a strong buy, based on 8 buy and 1 hold. At $ 103.13, the average price target implies a 33% gain in the next 12 months. (See BHVN Stock Analysis)
For more ideas for stocks trading at attractive valuations, visit Investing Insights .
