Insiders Grab Shares Of These Beaten Down Stocks
The market has been in a correction for months with some stocks down more than 50% from their post-pandemic highs and the insiders have started scooping up shares. The companies we are highlighting today are not only deeply discounted but they are growing within high-demand markets that are well-supported by secular trends.
Yellow Corporation Insiders See Deep Value In Their Stock
After several quarters of inactivity, the insiders at Yellow Corporation (NASDAQ: YELL) started buying shares of their stock in Q4 of 2022. That activity took a pause during Q1 2022 but then picked up again in Q2. The Q2 activity includes 10 transactions from 8 insiders including the CEO, the CFO, the COO, a VP, and four (4) directors so is very telling indeed. The transactions amount to about $0.637 million or about 3.2% of the market cap with shares trading near $3.75. This brings their total holdings up to 3.1% of the company and we think that figure could grow given the deep value at this price. At this price, the stock is trading at only 5X its earnings outlook while other LTL truckers are trading at much higher valuations.
The price action in Yellow Corporation is at the lowest level since 2020 and sitting on what should be a strong support level. This level is not only consistent with an important consolidation in 2020 that led to a very strong rally but also with a bottom that had begun to form in the pre-COVID time period. With revenue and earnings above those days and the insiders buying, we can’t help but see a bottom in the market. Assuming this is the bottom, price action should move sideways at this level and begin showing signs of upward pressure relatively soon.
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Arhaus Gives Up Pandemic-Premium, Insiders Buy
The insider activity was mixed at Arhaus (NASDAQ: ARHS) in Q2 but the takeaway from the data is nothing but bullish. While there was some selling it was done by a single shareholder in multiple transactions that were not enough to offset the buying. Net-buying between 3 top execs, 2 directors, and another large shareholder totaled $393,000 or about 0.05% of the company which isn’t much but still a bullish turn of events. There are few reasons for execs to buy more shares of their own stock, especially en masse, unless the shares are ridiculously cheap, some good news is on the way, or both. As it is, the insiders own about 1.5% of the stock while institutional holdings, which are also on the rise, amount to more than 92% of the shares.
Arhaus stock is also carrying a relatively high 8% short interest. This isn’t enough for a squeeze we think but can and will help with bottoming and the beginning stages of a rally. Turning to the chart, Arhaus stock has moved up off of a freshly set low and looks ready to spring higher. The indicators are on the verge of throwing bullish signals as well but there is a risk in getting too bullish too early. The stock is still in a downtrend and below the short-term EMA which could keep it under pressure in the near to short term.
A Turn Of The Tide For Crocs
The insider activity in Crocs (NASDAQ: CROX) is fairly balanced over the past 12 months. What that factoid doesn’t convey is that insider activity switched from selling to buying about midway through the period and the buying is ongoing. There have been 10 transactions between 5 directors, an EVP, and the CFO since the start of the year with the bulk of that activity occurring in Q2. The buying coincides with a two-year low in the share price that we think could be the bottom for the market. Not only is the $55 level consistent with an important rally point and continuation in 2020 but the indicators are highly divergent and indicate a market on the verge of a momentum change.
Companies in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Crocs (CROX)||$77.94||+1.5%||N/A||8.90||Moderate Buy||$94.25|
|Arhaus (ARHS)||$8.01||+1.0%||N/A||13.81||Moderate Buy||$12.75|