Heavy insider buying can be a good indicator of future price appreciation for stocks because insiders often have insight into the growth prospects of their companies. Shares of Intel (INTC), CSX (CSX), Centene (CNC), and AutoZone (AZO) have been heavily bought by insiders of late. So, we think it could be wise to add these stocks to one’s watchlist. Let’s discuss.
Since the beginning of the year, the stock market has faced substantial selling pressure due to investors’ concerns about aggressive interest rate increases by the Federal Reserve to tame runaway inflation, supply disruptions arising from the Ukraine-Russia war, rising energy and commodity prices, and the possibility of a recession.
However, these economic and geopolitical issues have not deterred insiders from scooping up shares of the companies for which they work. An insider can be anyone from an executive or a manager who owns more than 10% of the company’s voting shares. Due to their active involvement in the company’s affairs, insiders usually have the most up-to-date information on a company and its outlook. Insider buying is often considered a reliable indicator of whether a stock could appreciate because insiders often have intimate details of a company’s operations, Capex plans, and order flows that could be unknown to analysts and investors. In other words, heavy insider buying could mean better days ahead for a business.
Intel Corporation (INTCCSX Corporation (CSXCentene Corporation (CNC), and AutoZone, Inc. (AZO) have seen high levels of insider buying recently. So, we think it could be worth adding these stocks to your watchlist.
Intel Corporation (INTC)
INTC in Santa Clara, Calif., designs, manufactures, and sells essential technologies for the cloud, smart, and connected devices worldwide. The company’s segments include the data center group, Internet of Things Group; Mobileye; Non-Volatile Memory Solutions Group; and Programmable Solutions Group.
On December 16, INTC CEO Pat Gelsinger announced the building of a new chip packaging and testing factory in Malaysia, which is set to become operational in 2024. This new facility will likely enable the company to capture the rising demand for semiconductor chips worldwide as the application of semiconductor chips grows.
INTC’s operating income increased 17.5% year-over-year to $4.34 billion for the first quarter, ended April 2, 2022. The company’s net income increased 141.3% year-over-year to $8.11 billion. Also, its EPS came in at $1.98, representing an increase of 141.4% year-over-year.
INTC’s CEO Patrick P. Gelsinger bought 11,100 shares recently, while Director Ishrak Omar bought 11,025 shares on Feb. 22, 2022. The company’s EVP & CFO, Zinsner David, added 5,500 shares on May 3, 2022.
Analysts expect INTC’s EPS for its fiscal 2023 to increase 2.6% year-over-year to $3.61. The company’s revenue for the quarter ending Sept. 30, 2022, is expected to increase 5.5% year-over-year to $19.09 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has declined 26.8% in price to close the last trading session at $41.67.
INTC’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assesses stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Value and a B grade for Quality. It is ranked #13 out of 95 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the other ratings of INTC for Growth, Momentum, Stability, and Sentiment.
Click here to checkout our Semiconductor Industry Report for 2022
CSX Corporation (CSX)
CSX in Jacksonville, Fla., is a transportation company that provides rail-based freight transportation services, including traditional rail service and transport of intermodal containers and trailers and other transportation services, such as rail-to-truck transfers and bulk commodity operations. It categorizes its products into primary lines of business, such as merchandise, intermodal, and coal.
On April 14, 2022, CSX announced that the Surface Transportation Board (STB) had approved CSX’s application to acquire Pan Am Railways, Inc. (Pan Am). CSX’s President and CEO James M. Foote said, “We look forward to integrating Pan Am, their employees, and the rail-served industries of the Northeast into CSX and to working in partnership with connecting railroads to provide exceptional supply chain solutions to New England and beyond.”
For its fiscal first quarter, ended March 31, 2022, CSX’s free cash flow increased 4.4% year-over-year to $976 million. The company’s revenue increased 21.3% year-over-year to $3.41 billion. Also, its net earnings increased 21.6% year-over-year to $859 million. In addition, its EPS came in at $0.39, representing a 26% increase year-over-year.
CSX’s Director James Wainscott recently bought 10,000 shares at an average price of $33.21.
For the quarter ending June 30, 2022, CSX’s EPS and revenue are expected to increase 20.5% and 24%, respectively, year-over-year to $0.47 and $3.63 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has declined 17.7% in year-to-date price to close the last trading session at $30.91.
CSX’s POWR Ratings reflect solid prospects. It has a B grade for Momentum and Quality.
Within the B-rated Railroads industry, it is ranked #7 of 17 stocks. To see the other ratings of CSX for Growth, Value, Stability, and Sentiment, click here.
Centene Corporation (CNC)
CNC in St. Louis. Mo., is a multinational healthcare company that provides government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. It also provides education and outreach programs to inform and assist members in accessing appropriate healthcare services. It operates through the Managed Care and Specialty Services segments.
On Jan. 4, 2022, CNC announced that it had completed the acquisition of Magellan Health, Inc. Chairman and CEO of CNC Michael Neidorff said, “This transaction establishes a strong foundation from which we will innovate and reimagine behavioral and specialty health to provide comprehensive and integrated healthcare to our members while generating value for our state partners and shareholders.”
CNC’s adjusted net earnings increased 12.5% year-over-year to $1.08 billion for its fiscal first quarter, ended March 31, 2022. Its adjusted EPS came in at $1.83, representing an increase of 12.2% year-over-year. Also, its total revenues increased 24% year-over-year to $37.18 billion.
On April 28, 2022, CNC’s director Theodore Samuels bought 6,270 shares, and Christopher Coughlin and H. James Dallas, the Chairman of the CNC board of directors, bought 12,000 and 3,065 sharesrespectively, on April 29, 2022.
Analysts expect CNC’s EPS and revenue for the quarter ending June 30, 2022, to increase 17.6% and 17.5%, respectively, year-over-year to $1.47 and $35.43 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. And over the past nine months, the stock has gained 35% in price to close the last trading session at $87.21.
CNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Value and Sentiment. It is ranked #4 of 11 stocks in the A-rated Medical – Health Insurance industry. Click here to see the other ratings of CNC for Momentum, Stability, and Quality.
AutoZone, Inc. (AZO)
Memphis, Tenn.-based AZO is a retailer and distributor of automotive replacement parts and accessories. The company operates through the Auto Parts Locations segment. Its stores carry product lines for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive complex parts, maintenance items, accessories, and non-automotive products.
On March 22, 2022, AZO announced that its board of directors had authorized the repurchase of an additional $2 billion of its common stock as part of its ongoing share repurchase program. AZO’s CFO and Executive VP – Finance and Store Development Jamere Jackson, said, “We remain committed to our disciplined capital allocation policy to drive growth and enhance shareholder returns while maintaining adequate liquidity.”
For its fiscal third quarter ended May 7, 2022, AZO’s gross profit increased 4.7% year-over-year to $2 billion. The company’s net sales increased 5.8% year-over-year to $3.86 billion. Also, its EPS came in at $29.03, representing an increase of 9.6% year-over-year.
AZO’s CIO K. Michelle Borninkhof recently purchased 259 shares for $1,944.36.
Analysts expect AZO’s EPS and revenue for its fiscal 2022 to increase 18% and 8.6%, respectively, year-over-year to $112.33 and $15.88 billion. It surpassed The Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 31.8% in price to close the last trading session at $1,910.22.
AZO’s POWR Ratings reflects this promising outlook. The stock has an overall B rating, which translates to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Sentiment. It is ranked #10 of 69 stocks in the Auto Parts industry. Click here to see the other ratings of AZO for Growth, Value, Momentum, and Stability.
INTC shares fell $0.11 (-0.26%) in premarket trading Wednesday. Year-to-date, INTC has declined -17.83%, versus a -16.81% rise in the benchmark S&P 500 index during the same period.
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.