Smart investors are always looking for a reliable sign that will indicate a stock’s likely movement. The key is making the right moves at the right time.
Following the insiders is popular strategy, and for good reason. Insider traders are simply corporate officers, whose position inside their company gives them access to information that may not be available to the general public – yet. It’s only natural for them to trade on that information, and only fair that regulatory bodies require them to make those trades public.
So, investors looking for stocks that may be flying ‘under the radar,’ but with potential to climb fast, watching for insider purchases identify some sweet market plays. To make that search easier, the TipRanks Insiders’ Hot Stocks tool gets the footwork started – identifying stocks that have seen informative moves by insiders, highlighting several common strategies used by the insiders, and collecting the data all in one place.
Fresh from that database, here are the details on three stocks showing ‘informative buys’ in recent days.
Vonage Holdings Corporation (VG)
We’ll start in the technology sector, with Vonage Holdings. This company combines high tech and telecom, offering VOIP, cloud communications, contact center applications, and communications APIs. Vonage boasts a market cap of nearly $2.8 billion, and finished 2019 with over 1.1 subscribers and $1.2 billion in top-line revenue. Vonage works with both individual and business customers.
The dramatic shift toward virtual offices and remote work put a premium on networking and internet-based communications, so it is no surprise that, despite a dip in EPS, Vonage reported solidly profitable quarters in 1H20. Q1 showed earnings of 5 cents per share, well above the 2-cent forecast, while Q2’s 4-cent EPS matched the estimates.
The stock’s share price has also gained, reflecting the strength of the product in the current climate. Looking at VG's performance year-to-date, the stock is up an impressive 55%.
Given the strong foundation and the upward trend, it’s no wonder that insiders are buying VG shares. In two significant buys this month, CEO and President Rory Read added 34,805 shares to his holdings; he spent over $402,000 on the stock. Read’s holdings in Vonage now exceed $17 million.
Wall Street finds generally agrees that VG stock is worth buying. Writing for Oppenheimer, 5-star analyst Timothy Horan says, “VG delivered a solid quarter with revenue and adj. EBITDA beating our estimates. The company has built high-quality UCaaS and CPaaS services on its cloud platform but needs to refine and invest in its go-to-market strategy to drive future growth…” Looking ahead, Horan adds, “Vonage is transforming to an enterprise-focused communications provider with a unique bundle of services. The company is integrating unified communications with enterprise productivity tools including CPaaS and Contact Center.”
Backing his optimistic stance, Horan rates the stock an Outperform (i.e. Buy), and his $14 price target suggests a 22% upside potential from current levels. (To watch Horan’s track record, click here)
Overall, the Moderate Buy consensus rating on VG is based on 6 Buys and 3 Holds. The stock is selling for $11.45; the average price target of $13.88 is only slightly lower than Horan’s, and implies room for 21% upside growth in the coming year. (See VG stock analysis on TipRanks)
Kennedy-Wilson Holdings (KW)
Kennedy-Wilson, the next stock on our list, is an REIT with a diverse portfolio. The company’s investments include office and multi-family residential properties in the American West and Hawaii, the UK and Ireland, and in Italy and Spain. Kennedy -Wilson boasts $19 billion in assets under management.
The coronavirus crisis 1H20 has been hard on Kennedy-Wilson, and the company has seen earnings and share price both fall. Earnings dropped in Q1, and Q2’s results showed only 6 cents EPS against a 28-cent forecast.
Even with heavy pressure on earnings, KW has maintained its dividend payments. The next one is scheduled for October 8, at 22 cents per common share. At that rate, the annual yield is 6.1%, more than triple the average dividend yield found among S&P-listed companies. KW’s commitment to the dividend is clear from its 9-year history of consistent payments and regular increases.
While KW shares are down 34% year-to-date, management’s confidence is made clear by informative buys from two company officers. Stanley Zax, of the Board of Directors, bought 15,000 shares for almost $216,000; a few days earlier, CEO William McMorrow spent $1.06 million on 75,000 shares. Their purchases swung the insider sentiment on KW strongly positive.
Covering the stock for JPMorgan, 5-star analyst Anthony Paolone details some of strengths behind KW shares: “KW reported 2Q results that showed some impacts from COVID-19, but overall the business remains on track, and the stock is cheap… The company’s collections are running solidly at 92% overall: 98% for apartments, 96% for office, 54% for retail, and 76% for industrial. The company’s development pipeline saw a marginal amount of yield diminution, but we still think this pipeline should add about $2/share in value and is a compelling part of the story.”
Paolone’s $20 price target implies a 40% upside to the stock, and supports his Overweight (i.e. Buy) rating on the shares. (To watch Paolone’s track record, click here)
Overall, Kennedy-Wilson gets a Moderate Buy from the analyst consensus rating based on 2 recent Buy reviews. Meanwhile, the average price target of the stock, $20.50, suggests a 43% potential upside from the current $14.29 share price. (See KW stock analysis on TipRanks)
CNB Financial Corporation (CCNE)
The last stock on our list is a small-cap bank holding company with subsidiaries operating in the American Midwest: Western Pennsylvania and New York State, and central Ohio. CNB Financial operates several subsidiaries offering a full range of banking services to retail and business customers.
CNB Financial’s revenues in Q1 and Q2 were in line with the prior quarter’s; Q1’s dipped slightly from $35 million to $34 million, while Q2’s top line rose to $37 million. CNB Financial was confident enough during the crisis to maintain its regular dividend of 17 cents per share. The payment ,annualized to 68 cents, gives a yield of nearly 4.2%.
Even better, for investors, no fewer than 12 company officers have been buying shares in recent days. The two largest purchases came from Board members Peter Smith and Francis Straub. Smith bought 12,000 shares for $300K, while Straub picked up 8,000 shares for $200K. Other board members, as well as the CEO and five EVPs, made lesser purchases.
Jake Civiello, 4-star analyst with Janney, sees a clear path forward for CCNE, so long as the pandemic recedes. He writes, “Assuming the current pandemic-related economic slowdown has a near-term end-date, higher than peer organic loan growth should materialize through expanded penetration in markets not only with better customer demographics than the historical franchise, but also dominated by large bank competitors and a dearth of community banks…”
In line with his comments, Civiello rates the stock a Buy, and his $22 price target implies a 38% one-year upside potential. (To watch Civiello’s track record, click here)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.