The stock market is all about timing. Whether your investment strategy is bullish or bearish, what matters is making the right moves at the right time. This is the truth at the heart of the old Wall Street cliché that bulls and bears make money, while pigs get slaughtered. If you get greedy, and start chasing money, you’ll overlook the signs that tell you when to buy or sell.
Smart investors will be looking for reliable signs that will indicate a stock’s likely movement. In volatile times like these, those signs are more necessary than ever. One signal that has been correlated with a stock’s future performance is insider activity. This makes sense. Insiders, the corporate officers charged with running a company and producing profitable results for shareholders, are privy to far more information than the average stock investor – and they will use it to trade. Following an insider’s trading activity – buy or sell – is a viable strategy for investors.
How can you find the hottest insider trading stocks right now? There is a simple answer: TipRanks’ Insider Hot Stocks tool. This collates all the recent insider transactions to reveal stocks with the most bullish insider sentiment. Plus all the insiders are ranked so you can make sure you follow only the insiders that are actually making money.
With this in mind, here is the scoop on two beaten-down stocks that have seen recent insider activity.
Lamb Weston Holdings (LW)
We’ll start in Idaho, with the humble potato. Spuds may just be spuds, but they are also nutritionally complete and obligingly willing to take on whatever flavors we cook them with. Lamb Weston, based in the suburbs of Boise, Idaho, a state long-known for its potatoes, exists in, for lack of a better term, the industrial spud space. Lamb Weston is a food processing company that specializes in potatoes and potato products; it is one of the largest producers of frozen French fries and waffle fries for restaurants and retailers, and its products are sold in more than 100 countries.
A look at Lamb Weston’s recent performance shows us that the stock is down year-to-date, by 27%, while revenues have been rising year-over-year. In the most recent quarterly results, for Q1 of fiscal year 2022, the company reported $984 million in total sales, up ~13% yoy. EPS, however, missed the mark. At 20 cents per share, it was below the 37-cent analyst expectation – and worse, down 67% year-over-year.
Lamb Weston pays out a common stock dividend, and has a 5-year history of keeping the payment reliable. While modest – the dividend yields a decidedly modest 1.7% – payment has been steady for the past 8 quarters at its current level of 23.5 cents per common share.
While the earnings miss may have spooked investors to some degree, the company has taken its cue from the solid sales. In July, Lamb Weston announced it would be expanding its French fry processing facility in American Falls, Idaho. The expansion will add more than 350 million pounds to the facility’s annual capacity, at a cost of $415 million for the improvements.
Looking at the insider action, we find that Peter Bensen of the Board of Directors, bought $278,700 worth of shares – 5,000 shares in total – earlier this week.
Covering Lamb Weston for Jefferies, analyst Rob Dickerson takes an upbeat stance, writing: “Mgmt. stated that the cost pressures and supply chain tightness are transitory, and we agree; we just need such costs (esp. labor) to ease for the value unlock to occur. With prices moving higher and incremental pricing possible combined with likely easing costs in the out years and improved productivity savings from Win as One, getting to pre-pandemic margins or higher isn’t a matter of if, but rather when.”
"Net net, our positive thesis on Lamb hasn’t changed—we’re just now at a new and lower base with recovery taking longer than expected," the analyst summed up.
These comments back up Dickerson’s Buy rating, and his $80 price target implies room for the stock to grow ~41% in the year ahead. (To watch Dickerson’s track record, click here)
Wall Street is in broad agreement with the Jefferies take here, as is clear from the unanimous Strong Buy consensus rating based on 5 recent positive reviews. The shares are priced at $56.87 and the $78.40 average target suggests a 12-month upside of ~38%. (See LW stock analysis on TipRanks)
Annovis Bio (ANVS)
The second stock we’ll look at is Annovis Bio, a clinical stage biopharma company researching new treatment for severe neurological conditions. The company’s drug research pipeline is currently focused on Alzheimer’s disease (AD) and Parkinson’s disease (PD); the lead candidate, ANVS401, is in active Phase 1 and Phase 2 clinical trials against these diseases.
In July, Annovis saw a sudden share price crash, and is since down 75%. The drop coincided with the published results of a small Phase 2 study of lead candidate ANVS401 as a treatment for Alzheimer’s. The results were decidedly mixed – they showed a 30% increase in cognition, but ‘no statistically significant results’ on other key markers, such as problem solving, orientation, and judgement. Since then, in early October, the company has released other, more positive data on ANVS401.
Earlier this month, Annovis reported positive efficacy data about Parkinson’s disease from a Phase 2 completed dose response trial. The study, which involved 54 patients, showed statistically significant improvements in motor function.
On the ‘insider front,’ we find that company President and CEO Maria Maccecchini purchased 18,000 shares for $496,980 just this week. In a second informative transaction, Board member Mark White spend $137,000 on a tranche of 5,000 shares.
Jason McCarthy, writing from Maxim, notes the stock’s fall in price and the mixed data coming from the AD trials; however, he sees the positive data from the PD trials as more important.
“A P2 trial is meant to determine dosing and other parameters around a drug to move on to another study designed for the highest probability of success. From this aspect, that is what we believe was established with the data readout. The company plans to meet with the FDA to discuss next steps…. Given the pullback in shares and fundamental views of the company, which remain unchanged, there is still upside in the Annovis story.”
How much upside? McCarthy gives ANVS a $70 price target, which implies ~153% upside from current levels. His Buy rating remains intact for now. (To watch McCarthy’s track record, click here)
Some stocks fly under the radar, and ANVS is one of those. McCarthy's is the only recent analyst review of this company, and it is decidedly positive. (See ANVS stock analysis on TipRanks)
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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.