Market participants closely follow insider activity, as the transactions can reflect current sentiment surrounding the trajectory of the business. Of course, investors also typically get a confidence boost upon seeing an insider swoop in for a buy.
Insiders are defined as a company's officers, directors, or someone controlling at least 10% of a company's equity securities. To little surprise, many strict rules apply to insiders. And they typically have a holding horizon longer than most, a critical aspect to be aware of.
As of late, the insiders of several companies, including American Water Works AWK, AES AES, and Intel INTC, have acquired shares. What did they see? Let’s take a closer look.
American Water Works
American Water Works provides essential water services to millions of customers. A director recently purchased roughly 3800 shares, with the transaction totaling nearly $500k.
For those with an appetite for income, AWK shares have that covered, currently yielding a solid 2.2% annually with a payout ratio sitting at 59% of the company’s earnings. Impressively, the company boasts a 10% five-year annualized dividend growth rate.
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Shares recently got a boost following better-than-expected quarterly results, as we can see illustrated below. Regarding the release, AWK posted a 7% beat relative to the Zacks Consensus EPS Estimate and reported revenue 6% ahead of expectations.
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American Water Works is forecasted to expand its top and bottom line steadily, with estimates for its current year (FY23) suggesting 7% earnings growth on 8% higher revenues. Peeking ahead, estimates for FY24 reflect a 6% uptick in earnings paired with a 3% sales bump.
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Intel
Semiconductor giant Intel has enjoyed positive earnings estimate revisions across the board, landing the stock into a favorable Zacks Rank #2 (Buy). The CEO of Intel, Patrick Gelsinger, recently made a big splash, acquiring roughly 6800 shares at a total transaction value of $250k.
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The company has been consistently posting robust results, exceeding the Zacks Consensus EPS Estimate by an average of 130% across its last four quarters. Just in its latest print, the company posted a 95% EPS beat and posted revenue 5% ahead of the consensus expectation.
Intel’s top line appears to be finally stabilizing.
Image Source: Zacks Investment Research
AES
AES, a current Zacks Rank #2 (Buy), is a diversified power generation and utility company. The CEO, Andres Gluski, recently purchased 50k shares, with the transaction totaling just over $800k.
Like AWK, AES shares reward investors with an annual dividend that currently yields a sizable 4.1%. And the company has displayed a commitment to increasingly rewarding shareholders, carrying a 5% five-year annualized dividend growth rate.
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AES shares have recently busted through their 50-day simple moving average, reflecting near-term positive momentum. Investors would likely benefit by waiting to see if shares can continue trading above this level, which would reflect continued bullishness.
Image Source: Zacks Investment Research
Bottom Line
It’s easy to understand why investors closely follow insider activity, as it can provide a snapshot of current sentiment surrounding a company's future.
An insider buy is undoubtedly a positive, whereas a sell could carry negative undertones in certain situations.
And for those seeking stocks insiders are diving into, all three above – American Water Works AWK, AES AES, and Intel INTC – fit the criteria nicely.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2023. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Intel Corporation (INTC) : Free Stock Analysis Report
The AES Corporation (AES) : Free Stock Analysis Report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
