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In this article, I will feature one services sector stock that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

Chegg (NYSE:CHGG) operates student-first connected learning platform that empowers students to take control of their education to save time, save money and get smarter.

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Insider buying during the last 30 days

Here is a table of Chegg's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares PurchasedCurrent OwnershipIncrease In Shares
Robert ChesnutSVPNov 2213,000125,098 shares+11.6%
Barry McCarthyDirectorNov 13-2041,80096,441 shares+76.5%
Daniel RosensweigCEONov 14-186,000629,082 shares+1.0%
Andrew BrownCFONov 145,000161,061 shares+3.2%
Ted SchleinDirectorNov 14-1520,000240,743 shares+9.1%

There have been 85,800 shares purchased by insiders during the last 30 days.

Financials

Chegg reported the pro forma first nine months financial results with the following highlights:

Revenue$178.5 million
Net loss$50.4 million
Cash$158.5 million
Net tangible book value$2.48 per share

Outlook

The costs for college textbooks continues to escalate, rising 812% since 1978, outpacing the rise in medical care and college tuition up 575% and 559%, respectively.

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(Source)

This trend should help Chegg's revenue growth.

Competition

Chegg's competitors include Barnes & Noble (NYSE:BKS), Amazon.com (NASDAQ:AMZN), and Apple's (NASDAQ:AAPL) iTunes that provides eTextbooks. Here is a table comparing these companies.

CompanyCHGGBKSAMZNAAPL
Market Cap:638.30M940.42M171.30B471.21B
Employees:61333,85088,40080,300
Qtrly Rev Growth (yoy):0.17-0.090.240.04
Revenue:246.74M6.72B70.13B170.91B
Gross Margin:N/A0.240.270.38
EBITDA:42.82M20.43M3.17B55.76B
Operating Margin:-0.12-0.030.010.29
Net Income:-42.31M-223.48M132.00M37.04B
EPS:N/A-3.830.2839.75
P/E:N/AN/A1,362.3913.21
PEG (5 yr expected):N/A0.0813.820.84
P/S:2.590.142.432.74

Chegg has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
BKS0429,760
AMZN02,443,618
AAPL0242,596

Amazon has also seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders buying Chegg and there have not been any insiders selling Chegg during the last 30 days. Two of these five insiders increased their holdings by more than 10%.

Chegg had its IPO priced at $12.50 and the stock started trading on November 13. The insiders purchased their shares on November 13 to 22 at a price range of $7.61 to $12.50. I have a cautiously bullish bias for the stock currently based on the intensive insider buying.

Source: Chegg: 5 Different Insiders Have Purchased Shares This Month