Some of the most beautiful things we have in life comes from our mistakes.” ― Surgeo Bell
We continue our new weekly feature today. Every week we will be providing brief overviews of five interesting stocks insiders are currently buying. I have always found insider buying one of the best indicators that a stock may be undervalued.
In fact, insider buying was a great 'tell' that the market had gotten oversold during the fourth quarter sell-off. Insider buying hit an eight-year high in December.
Here are five stocks that have had significant insider buying over the past two weeks for consideration after Friday's market rout.
Let's start with Synalloy (SYNL). This off-the-radar maker of stainless steel pipes, fiberglass, steel storage tanks, and specialty chemicals has had a busy few months. In early December, the company made a significant acquisition given its market cap of approximately $135 million.
In February, the company announced a stock buyback program that would retire approximately 10% of its outstanding float at current trading levels. In early March, Synalloy reported solid Q4 results that had revenues jumping more than 35% on a year-over-year basis. Insiders must believe the company is heading in the right direction. Over half a dozen insiders have purchased just over 80,000 shares in aggregate or just more than $1.2 million in insider buying. This occurred through myriad transactions from March 7th through March 20th.
Next up is Camping World Holdings (CWH). The recreational concern has been hit by several factors in recent quarters. These include an inventory build in the space as well as the impacts from tariffs. Goldman Sachs (NYSE:GS) also recently cut its rating on Camping World.
However, the stock does seem to be trying to form a bottom here in 2019 (above). The stock also seems cheap at approximately eight times this year's projected EPS. The shares also pay nearly a 2.5% dividend yield. Insiders seem to be taking a longer-term view. A beneficial owner just bought a bit over 56,000 in new shares on March 19th. This follows a just over $350,000 buy from the same individual on March 8th. The CEO at Camping World also purchased just over $1.3 million in new shares on March 15th, it should be noted.
Cadence Bancorporation (CADE) sees new buys from several directors as well as its CFO, COO, and CEO on March 15th and March 18th. The aggregate buy amount from these seven purchases totals just north of $2 million.
Like most bank stocks, the shares have slid in recent months as the 10-Year Treasury yield has slid from 3.25% in summer to just under 2.45% this week. However, the shares look like a good value here at just over eight times earnings. The shares also yield near four percent after the company bumped up its annual dividend payout 16.7% earlier this year. Cadence also seemed to have good performance (below) across a variety of metrics in Q4.
Another 'off the radar' name seeing insider buying this week is Air Transport Services Group (ATSG). This Ohio-based concern owns and leases cargo aircraft to airlines and other customers. The firm also provides airline operations to delivery companies, airlines, freight forwarders as well as the U.S. military.
The stock has had a bit of a roller-coaster ride in recent months. Both top-line and bottom-line Q4 results slightly beat estimates when the company reported quarterly numbers in late February. It should be noted that revenues fell some 13% year-over-year and the stock declined on the report. Insiders must believe the company has good prospects. An officer, CEO and a director picked up almost 33,000 shares in aggregate via four transactions on March 18th and March 20th. Air Transport has a market cap just over $1.2 billion.
Finally, Tivity Health (TVTY) is another small-cap name seeing several insiders adding to their core stakes this week. This company has a market cap of approximately $800 million and provides fitness and health improvement programs which include its SilverSneakers senior fitness program which is available to members of Medicare Advantage, Medicare Supplement, and group retiree plans as well as Prime Fitness, a fitness facility access program through commercial health plans and employers.
This is a name near 52-week lows. The shares plunged in December when the company announced it has acquired Nutrisystem (NTRI) which included a better than 35% buyout premium. The shares have been in pull-back mode since that announcement. Evidently, insiders believe the stock is now oversold. Six different directors purchased approximately 35,000 shares in aggregate in transactions from March 20th to March 22nd this week. The shares do seem to be reasonably valued at eight times earnings.
Cantor Fitzgerald reissued their Outperform rating and $40 price target on TVTY on March 11th. Here is the commentary from that analyst call.
We reiterate our Overweight rating on TVTY shares and our price target remains $40. The company closed the acquisition of Nutrisystem. In mid-February, the company provided lower-than-expected guidance for both its core business and Nutrisystem. TVTY’s 2019 outlook was negatively affected by a faster-than-expected run-off of UnitedHealth Group (UNH – Overweight) lives at SilverSneakers, and Nutrisystem had a difficult start to the 2019 diet season. That said, investor expectations are extremely low, with the shares trading at 9.0x and 7.3x our 2019 and 2020 combined EPS estimates, respectively. Although investor skepticism remains high, we believe, with over 100% upside potential to our price target, the risk/reward trade-off is attractive."
And those are five small-cap stocks seeing significant and recent insider buying for consideration.
Always drink upstream from the herd.” ― Will Rogers
Author's note: I present an update of my best small and mid-cap stock ideas that insiders are buying only to subscribers of my exclusive marketplace, The Insiders Forum. Try a free 2-week trial today by clicking on our logo below! Take advantage of this offer before the end of March and enjoy 20% off your first year of membership if you decide to extend pass the free 14-day trial period.
Disclosure: I am/we are long CWH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.