Insider buying stocks are shares purchased by executives within a company. And on Wall Street, this often spotlights undervalued assets and signals future potential. Also, it underscores strong confidence upper management may have in the strategic direction of the business. As a result, investors keen on uncovering the next major opportunities keep a close eye on when chief executives and other company insiders publicly buy shares in their own companies.
Notable academic research suggests when insiders are buying. It can signal sunny days ahead for a given stock and even for the broader market. On the other hand, selling shares in one’s own company often means a storm is brewing.
Hence, insider buying stocks could be one of the tools for investors with long-term vision. Heading into May, three stocks that have recently drawn significant investments from their leaders highlight a bullish outlook.
REITs to buy Real estate investment trust REIT on an office desk.
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A real estate investment trust (REIT), Saul Centers (NYSE:BFS) specializes in mixed-use shopping centers. BFS’ portfolio includes over 60 properties primarily in the northeastern U.S.
Recent economic challenges haven’t stopped Saul Centers from achieving strong financial growth in 2023. The REIT recorded a 7% increase in fourth-quarter revenue year-over-year (YOY), totaling $66.7 million. Additionally, net income climbed almost 14% to $17.5 million, compared to $15.4 million in the prior-year quarter. This growth was primarily driven by higher termination fees and base rents, despite elevated costs.
Also, Saul Centers is strategically focusing on grocery-anchored shopping centers. As a result, the REIT enjoys a relatively stable and predictable income stream, making it an attractive option for income-seeking investors. The confidence in the company’s trajectory was further underscored by recent insider purchases. In March, chief executive officer (CEO) B. Francis Saul II and President/Chief Operating Officer (COO) David Todd Pearson significantly increased their holdings in Saul Centers. As a result, corporate insider ownership has increased.
Yet, despite positive indicators, BFS stock has underperformed the broader market, declining around 10% year-to-date (YTD). Nevertheless, the company still offers a robust 6.5% dividend yield. Also, analysts remain optimistic, setting a 12-month price target of $43.50 for the stock, suggesting a 22% upside potential from current levels.
Enphase Energy (ENPH)
Smartphone with logo of American company company Enphase Energy Inc. (ENPH) on screen in front of business website. Focus on left of phone display. Unmodified photo.
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Next up on our list of insider buying stocks is Enphase Energy (NASDAQ:ENPH). As a leading provider of microinverters, the company sits at the heart of a rapidly growing solar energy industry. These microinverters work with solar panels to convert DC power into AC power, making it easier for homeowners to generate their own electricity.
Recent data suggests that by 2032, the solar power market worldwide is likely to exceed $435 billion, with a compound annual growth rate (CAGR) of nearly 6%. Despite the sunny outlook, its most recent earnings report reveals a sharp decline in quarterly revenue, falling to $302.6 million from $724.6 million YOY. Rising interest rates impacted residential solar installations and thus, revenues. Also, adjusted net income decreased significantly from $212.4 million to $73.5 million.
Yet, Enphase Energy CEO Badri Kothandaraman expresses optimism, stating that he sees falling interest rates and rising utility costs as additional tailwinds. In late February, Kothandaraman increased his stake, acquiring 4,000 shares of the company, signaling strong confidence in its prospects.
So far in 2024, ENPH shares have declined around 18%. Yet Wall Street has a 12-month price target of $134 on ENPH, implying about a 23% upside from current levels. Finally, the company’s price-to-earnings ratio is around 32x, which is lower than its historical average. Any further declines in the share price may provide an opportunity for long-term investors interested in a high-growth stock like Enphase Energy.
Orion Group Holdings (ORN)
An image of construction workers on a building construction site.
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The final pick among top CEO stocks is Orion GroupHoldings (NYSE:ORN), a silent force in the construction industry. With a focus on marine and specialty construction, ORN plays a crucial role within infrastructure projects.
In late February, the company reported a fourth-quarter revenue increase of 2.8% YOY, reaching $201.6 million. The growth was due to gains in marine projects like Pearl Harbor’s Dry Dock, despite a decline in concrete revenues from winding down operations in Central Texas. Net loss narrowed to $4.4 million from $4.9 million.
Orion’s management remains optimistic, forecasting stronger performances in 2024 and 2025, supported by a solid project backlog and favorable market conditions. Recent key strategic moves have include a disciplined bidding strategy, executive hires and securement of a $103 million credit facility. All of this positions Orion well for future growth.
In a recent show of confidence, two ORN executives, CEO Travis Boone and General Counsel Chip Earle, added to their Orion holdings. The recent purchase increased Mr. Boone’s overall ORN stake to 402,557 shares.
Impressively, shares have surged almost 63% YTD. The stock trades at 34 times forward earnings and 0.40 times sales. Finally, analysts have a $10 price target on ORN implying a 24% upside from current levels.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.