Insider buying has been picking up with stocks from all sectors and industries going on sale. While the list of stocks with insider buying is long, the three top names in July are Occidental Petroleum, Rocket Companies, and Comtech. These are the top names because their activity is not only high but distinguished by unusual characteristics that suggest a higher potential for stock appreciation. The takeaway is that in terms of dollar value, the number of insiders buying, and the number of transactions these companies are outperforming all others.
Occidental Petroleum Makes The List, Again
Occidental Petroleum (NYSE: OXY) has been in the news because of a series of insider buys by investing guru Warren Buffet. Mr. Buffett and Berkshire Hathaway made 4 purchases of Occidental Petroleum stock in July bringing the total to 11 transactions over the last 3 quarters for a total share count of just over 20%. This puts Berkshire Hathaway in a unique position and it's one the company usually leverages to success. Total institutional and corporate ownership, including Berkshire Hathaway, is over 86% and growing.
In regard to Occidental Petroleum’s value and dividend, the stock trades at a discount to its peers which together trade well below the broad market average. The discount to peers is due in part to the dividend which is well-below peers like Exxon Mobil but there is a mitigating factor. The company cut the dividend at the start of the pandemic and has yet to bring it back to those levels. In light of the windfall profits posted for the 2nd quarter, the odds are high there will be a dividend increase and it could be a big one. The payout is currently $0.13 per share quarterly and was once $0.79, a difference of more than 400 percentage points.
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Rocket Companies Ratchets Up Some Insider Transactions
Rocket Companies (NYSE: RKT) is getting bought up by two of its insiders, the CEO Jay Farner and Director Mattew Rizik. The two made 26 purchases in July for a total of $2.85 million worth of shares bringing the total insider holdings to 94%. This is an overwhelming ratio of shares and compounded by the 3% institutional ownership and 32% short interest which make it a tightly held and overly-sold name in the marketplace. At face value, the ownership numbers have the stock set up to implode under the weight of short-selling or rocket higher due to results. As it is, the company's revenue and earnings are in decline and the analyst's sentiment is mixed. The analysts rate the stock a hold but view it as fairly valued at current levels. The outlook for Q2 results isn’t bright, either, but the bar is set low so there is a chance for outperformance which could spark a short-covering rally and short-squeeze.
High-Yield Small-Cap Comtech Is Getting Bought
Comtech (NASDAQ: CMTL) is a high-yielding small-cap that manufactures components for the telecommunications and satellite industry. The stock yields nearly 3.5% after the correction in share prices and the insiders, at least, have begun to buy it. A total of 5 insiders made 6 purchases in July for a total of $289,000 or about 0.1% of the current market cap. The purchases are noteworthy not only for the breadth of insider buying but because this is the first insider activity in years and the total holdings are approaching 6%. A positive outlook or not, the insiders think something is going on so the news may be good over the next few months and may include supply chain improvement, improved profitability, or a better-than-expected result from recent deals.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Occidental Petroleum (OXY)||$62.82||+0.7%||0.83%||6.20||Moderate Buy||$70.58|
|Rocket Companies (RKT)||$10.32||+7.2%||N/A||8.06||Hold||$10.42|
|Comtech Telecommunications (CMTL)||$12.25||+11.9%||3.27%||-11.14||Hold||$12.00|