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Solid Insider Buying Puts These 2 Stocks in Focus
Inside trading has a bad sound to it, but what is it really? Corporate insiders are company officers – the Presidents and VPs and Execs and Board members who run the world’s public – and private – companies. Their positions put them ‘in the know,’ and make them privy to the inner workings of their companies. Using that information to buy up stock would be underhanded, except for two points. First, they trade public shares openly, and the investing public can see what they are doing – and read the hints given. And second, corporate insiders are not just trying to make money for themselves. Their positions make them responsible – to their Boards, to higher execs, and to the company shareholders – for bringing in a profit. What this means for investors, is insider moves provide valuable hints to a stock’s soundness. A casual stock player can put together a viable strategy just by noting and following the trades made by corporate insiders. TipRanks tracks these moves, and makes the data available to the public through the Insiders’ Hot Stocks tool. With its up-to-date data and variety of filters, this tool can bring some interesting stock options to light. We’ve picked two stocks that have seen major inside trades. To give added depth, we’ll look at the latest comments from Wall Street’s analysts, and see what makes them so compelling. Fortress Transportation and Infrastructure (FTAI) We’ll start with Fortress Transportation, an investment trust company focused on transportation assets and structured as on the REIT model. Fortress’ portfolio contains two major segments, equipment and infrastructure, split two-thirds equipment and one-third infrastructure. The equipment segment is primarily aviation engines and aircraft, which are leased to operators. Currently, Fortress has 108 out of 168 engines leased, along with 69 out of 76 aircraft. The focus on aviation interests hurt Fortress through the ‘corona year,’ and revenues declined in 2020. The most recent quarterly report, for 4Q20, showed $76.4 million at the top line, down 53% year-over-year. Despite the yoy decline, FTAI shares have shown a gain of 275% over the past 12 months. In addition to solid stock performance, Fortress has kept its quarterly dividend reliable. The company has a 6-year record of maintaining the payment, and corona or no corona, kept it up through the past year. At 33 cents per share, the dividend annualizes to $1.32 per common share and yields 4.65%, well above the 1.78% average dividend found among peer companies. Turning to the insiders, we find one impressive buy. Martin Tuchman, of the company’s Board of Directors, put down $20 million to buy 800,000 shares on March 25. Wall Street also likes FTAI, and analyst Randy Binner, covering the stock for B. Riley, lays out a solid bull case. “FTAI currently trades at 2.3x BV and a 4.5% dividend yield, which we believe continues to be attractive in a low rate environment. To the extent the company can execute on strategies to build greater market share in the aircraft engine maintenance area, there is potential for significant multiple expansion if the market views the company more as a differentiated aviation company play, in our view. Higher operating results could support a dividend increase as well,” Binner opined. In line with his estimates, Binner sets a $37 price target on the stock, to go along with his Buy rating. His target implies a one-year upside of ~33%. (To watch Binner’s track record, click here) It’s not often that the analysts all agree on a stock, so when it does happen, take note. FTAI’s Strong Buy consensus rating is based on a unanimous 7 Buys. The stock’s $32.17 average price target suggests upside of ~15% and a change from the current share price of $27.90. (See FTAI stock analysis on TipRanks) Advantage Solutions (ADV) Shifting gears, we’ll look at a business solutions company, Advanced Solution. This company acts as a consultant and service provider for businesses in a wide range of fields – sales, marketing, digital commerce, and retail – offering tech and data solutions to drive consumer demand, increase total sales, and streamline operations. The company is based in Irvine, California and operates worldwide. Advantage went public last autumn through a SPAC merger deal with Conyers Park II Acquisition, closing the combination on October 28. On that day, ADV shares closed at $8.86 on the NASDAQ index. Since then, the stock has been highly volatile – but is on an upward trend now, and shows a net gain of 33% since the SPAC closed. There were two big insider trades on ADV this month, by company CEO Tanya Domier and Board member James Kilts. Domier bought 27,250 shares for $301,658, while Kilts bought two batches of stock, totaling 64,463 shares, spending $702,144. Taken together, these trades swung the insider sentiment on this stock strongly positive. ADV’s future prospects also caught the attention of Deutsche Bank analyst Ashish Sabadra. “Trends in the Marketing segment are improving as the number of in-store sampling events has bounced back with January reaching 135k events vs. the lows of 20k seen last April…. ADV is also a significant player in the ~$800 billion US eCommerce market where it generates half a billion dollars of business, growing double digits in the medium term as the overall eCommerce market expands. We believe ADV remains well positioned to benefit from the reopening of the economy as revenue growth likely accelerates in 2H21/2022 with the return of experiential marketing,” Sabadra wrote. In line with this outlook, the analyst rates the stock as a Buy, with a $14 price target implying an upside of 18% for the year ahead. (To watch Sabadra’s track record, click here) Some stocks fly under the radar, and ADV is one of those. Sabadra’s is the only recent analyst review of this company, and it is decidedly positive. (See ADV 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.
