President John Kennedy famously said, once, “A rising tide lifts all boats,” and this is true in the stock markets, too. We’re in the midst, now, of just such a rising tide – at least for the short term. The main indexes, the Dow, the S&P, and the NASDAQ, are all up between 9% and 12.5% this month, and the trends are positive. The recent election, making clear the prospect of a divided government unlikely to pass radical changes in economic policy, and positive COVID-19 vaccine news, have improved investor sentiment.
And not just investors. Corporate insiders are buying up stocks, as well, in a show of confidence that should attract investors’ attention. These insiders are not just buyers when it comes to stocks – they are also custodians. The insiders are corporate officers and board members, responsible for maintaining the profitability of their companies, and their companies’ stocks, for the benefit of the shareholders. In addition, their positions give them access to information that is not always available to the general public. In short, following the corporate insiders is a viable path toward profitable stock moves.
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 "Strong Buy" stocks showing ‘informative buys’ in recent days.
Hanesbrands is undoubtedly one you are familiar with. Hanes is a clothing manufacturer, specializing in undergarments, whose brands includes Hanes, Playtex, L’eggs, Champion, and plenty more. The company’s garments are somewhat ubiquitous, reflecting their necessity, and these modest products brought in over $7 billion in revenue last year.
This year, Hanes, like much of the retail world, took a hit in the first quarter when the corona pandemic forced a general economic shutdown. But the company quickly rebounded, and the Q3 revenues, at $1.81 billion, were the highest of the last four quarters. Earnings show a more mixed picture; Q2 EPS came in at an excellent 60 cents, while Q3 showed a 30% drop to 42 cents. That drop, however, still left the Q3 earnings in line with previous years’ results.
The earnings report, with its combination of beating the estimate while falling year-over-year, pushed the stock down in recent sessions. Even so, HBI has clearly recovered its value since hitting bottom in the ‘corona recession.’ The stock is up ~90% from its low point this year. Adding to the attraction, Hanes has kept up its regular stock dividend, maintaining the payout at 15 cents per common share, for all of 2020. That dividend is now yielding an above-average 4.6%.
On the insider front, two transactions, both by Ronal Nelson of the Board of Directors, have swung the sentiment needle on Hanes well into positive territory. In the last five days, Nelson has purchased over $1 million worth of shares, in two tranches, one of 50,000 shares and the other of 30,000.
Covering Hanesbrands for Raymond James, analyst Matthew McClintock notes the company’s strong current position.
"We believe that HBI's 3Q20 results signal a continuation of market share gains in its core categories driven by the company's inherent competitive advantages of scale, strong brands, and in-house supply chain,” the 5-star analyst noted.
In addition, McClintock believes the company demonstrates its ability to adapt to the coronavirus scene: “HBI's protective garment businesses is expected to slow meaningfully going forward. This recently developed business line to help fight the pandemic generated $179 million in revenues during 3Q20 (reflecting 10% of revenues) — surpassing HBI's previous 2H20 outlook of $150 million.”
McClintock rates HBI a Strong Buy, and his $16 price target suggests it has a 22% upside from current levels. (To watch McClintock’s track record, click here)
Other analysts are on the same page. With 4 Buys and 1 Hold received in the last three months, the word on the Street is that HBI is a Strong Buy. (See HBI stock analysis on TipRanks)
Dun & Bradstreet Holdings (DNB)
The next stock is a newcomer to the markets. Dun & Bradstreet is a data analytics company, with a focus on business needs and services. The company, frequently known as D&B, offers data services in risk and finance, ops and supply, sales and marketing, and research and insight. D&B has a global reach, and this past summer, 171 years after its founding, it held its IPO.
That IPO raised an impressive $1.7 billion in new capital – and sold more shares than expected, at a higher price than forecast. After initially pricing 65.75 million shares at $19 to $21 each, the company’s June IPO saw the sale of 78.3 million shares at a share price to $22. Since then, the stock is up ~30%. Revenues are strong, too. For the calendar Q3, the company’s first in public trading, the top line hit $442 million, its highest level in over a year.
All of this could explain the strongly positive insider sentiment. Two large buys in the past week are flashing signals for investors. Bryan Hipsher, company CFO, purchased over $105,000 worth, while CEO Anthony Jabbour spent $999,780 on a bloc of 38,000 shares. The two sales together total over $1.1 million.
In his comments, Weber says, “We see D&B's ongoing transformation as intact, supporting more consistent rev growth, margin expansion and better cash generation… On the tech side, the cloud based Analytics Studio is ramping, and initial functionality from Project Ascent is expected in 4Q20 (improve data ingestion, reduced latency); the company continues to add new/alt data sources and coverage.”
D&B shares are currently trading for $27.40, and its $31.67 average price target is slightly more bullish than Weber’s, implying a 15% upside for the coming year. The analyst consensus rating, a Strong Buy, is based on a unanimous 3 Buy reviews. (See DNB stock analysis on TipRanks)
Last but not least is Assurant, niche player in the insurance industry. Assurant provides insurance products and solutions for a variety of needs, including connected devices, vehicles, rental units, funerals, and consumer goods. Some of these are traditional insurance products (vehicles come to mind here), while others are good examples of a company spotting an unfilled need – and moving to fill it (connected devices and rental units).
Assurant’s shares and fiscal results this year have been solid. The stock has fully recovered from the COVID hit, and now shows a real, if modest, year-to-date gain of 5.5%. At the top line, revenues have remained firmly between $2.4 billion to $2.6 billion for the past 12 months; the Q3 number, at $2.5 billion, is smack in the middle of that range. The only dark spot is EPS, which slipped in Q3 to $1.41, a sequential drop of 48%.
The drop didn't bother Braxton Carter, the company's board member, too much. Carter bought a bloc of 1,950 shares on November 6, paying over $249,000.
Covering the stock for Truist, 5-star analyst Mark Hughes points out the company’s strength in the underappreciated rental insurance market.
“The company has renewed 85% of its US customers in Lender-placed since the start of last year. They are not yet seeing any uptick in placements from the surge in mortgage delinquencies, but suggested there could be incremental volume in 2021 depending on the state of the housing market. The acceleration in Multi-family revenue growth, to 9% in the third quarter, was attributed in part to the momentum with the Cover360 property management product,” Hughes noted.
In analyst concluded, “Assurant has had success in operating in parts of the insurance industry that are much less-traveled than most - particularly in the controversial and volatile, but very profitable, lender-placed homeowners insurance market.”
To this end, Hughes rates AIZ a Buy, along with a $150 price target. This figure implies a 10% upside from current levels. (To watch Hughes’ track record, click here)
All in all, with 3 Buy reviews on record, the Strong Buy analyst consensus rating on Assurant is unanimous. The stock’s average price target, of $149.67, is in line with Hughes’, and suggests a one-year upside potential of ~10%. (See AIZ stock analysis on TipRanks)
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.