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3 Undervalued Stocks The Insiders Are Buying

3 Undervalued Stocks The Insiders Are Buying

When The Insiders Are Buying … 

Insider buying is always a good indication a stock is undervalued and, in cases such as we have today when the stocks are actually undervalued the signal is all the stronger. Dave & Busters (NYSE: PLAY), JELD-WEN (NYSE: JELD), and Rocket Company (NYSE: RKT) are all businesses supported by secular trends but hampered by near-term headwinds. This situation has them all trading at attractive levels relative to their outlook so the insider buys are all the more meaningful.

Dave & Busters CEO Makes 2nd Purchase 

Dave & Busters CEO Kevin Sheehan made his second purchase in three months during the first week of Q1 bringing the total insider holdings up to about 3.6%. Mr. Sheehan made another purchase in late December 2021 making this the 2nd large transaction by an insider in the last four months. Mr. Sheehan bought 25,000 shares for about $925,000 offset by some smaller sales by lower-level execs. Those sales are consistent with share-based compensation so not a worry but they may keep pressure on the stock in the near term. 

Longer-term, Mr. Sheehan’s purchases add to the support given by the institutions and they have been buying the stock ever since the pandemic bottom. The institutions have been net buyers for 8 quarters and now hold nearly 93% of the stock. It is worth noting a good 12% of the shares on the market are sold short as well, adding another catalyst for upward price movement. 

Three (3) Undervalued Stocks The Insiders Are Buying

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JELD-WEN Is Getting Bought By Insiders And Institutions 

JELD-WEN caught our eye only a week or so ago when it reported earnings. It was then we discovered a large institutional shareholder had been buying shares and the firm has been very active in the time since. Turtle Creek Asset Management bought 100,000 shares the first week of April and then added another 375,000 over the next week in 3 follow-on transactions. These are only the latest in a string of purchases that has Turtle Creek holding up to almost 10.5 million shares or over 11% of the company. Total institutional and insider holdings amount to over 97% of the company and they are on the rise. 

It is also worth noting that, since our recent look at the stock, it has picked up a new analyst as well. Analysts at Credit Suisse initiated the stock at Outperform with a $24 price target compared to the Insidertrades.com consensus of firm Hold/weak Buy and price target of $28. The $28 target is about 40% above the recent price action but is down a bit in the 3 months and 1-month comparison. 

Three (3) Undervalued Stocks The Insiders Are Buying

Rocket Company Is Tightly Held And Getting Tighter 

Rocket Company has never reported an insider sale in its history and insiders hold 93.2% of the company. The only transactions of record are five recent purchases by CEO Jay Farner. Mr. Farner bought about 68,000 shares for a total of $743,000 or about 3.88% of the market cap. Add in another 3.74% of institutional holdings and this is a very tightly held stock and available shares are getting sparse. The company is also sitting on a 22% short interest that makes us believe the stock is about to see a short-covering rally and maybe a squeeze. All it will take is one good bit of news. 

Three (3) Undervalued Stocks The Insiders Are Buying

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
JELD-WEN (JELD)$13.85-1.3%N/A10.11Hold$17.91
Rocket Companies (RKT)$10.65-1.4%N/A8.32Hold$10.42
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