In an uncertain time like this, investors need a clear signpost on their stock choices, something that will give a definite indication of quality. The sheer volume of market data, a veritable flood even in calm market conditions, rises to a deafening cacophony when volatility spikes. A reliable guide is necessary.
And that brings us to the corporate insiders. These are company officers, CEOs, executive VPs, CFOs… the officers who hold high positions and have a responsibility to shareholders and Boards for bringing in profits and returns. Their positions give them an inside view of the company’s workings – and that gives them a step up when they start trading their own stocks. To keep a level playing field, market regulators require that the insiders publish their trades, and investors can use that published trading data to inform their own decisions.
Investors can look to these moves, using TipRanks’ Insiders Hot Stocks tool. We’ve used that tool to do just that, and found a couple of stocks that have shown multi-million-dollar insider trades recently – and those are purchases that the insiders don’t make lightly. Moreover, these names show solid upside potential and ‘Buy’ ratings from the Street’s analysts.
Enovix Corporation (ENVX)
We’ll start with Enovix, an innovative company working on the design and manufacture of the next generation in energy storage – specifically, the advanced batteries using a combination of silicon anodes, 3D architecture, and anti-swelling constraints. The company’s battery designs, in prototypes, have permitted higher energy densities, which are necessary for modern electronics, from mobile devices such as tablets and laptops to the larger scale of electric vehicles.
The silicon anodes are the heart of the company’s tech. Silicon anodes offer the possibility of doubling the storage capacity of batteries when compared to the current graphite anode technology. Enovix has used this high energy density to develop a line of new, small batteries, intended for use everything from laptops to smartphone handsets to wearable electronics.
Enovix has seen two important business developments during March. Both concern the manufacturing end, with the first development dealing with the company’s next generation autoline. This is the design of the firm’s new assembly line, dubbed ‘Gen2 Autoline.’ The Gen2 design was approved by the company’s Board, and going forward will permit increased automation, higher rates of parallelism, and built in metrology. Overall, Gen2 is seen as a major step toward the scaling up of Enovix’s activities.
The second big development will build up from Gen2; Enovix has announced approval of the location for its first high-volume production battery assembly facility. The new assembly line is being called ‘Fab 2,’ and it will be set up in Penang, Malaysia. From Enovix’s perspective, this location brings several advantages, including an educated and skilled workforce, in a business-friendly jurisdiction, not far from the production floors run by potential customer firms.
This puts some context behind the series of inside purchases made by Board member Thurman Rodgers over the past month. Rodgers has bought a total of 500,000 shares of ENVX, which he paid a total of $5,381,551.
In addition to the insider interest, this stock has picked up attention from Cantor analyst Derek Soderberg, who writes: “We believe the design approval of Gen2 marks a major milestone for Enovix. The result of this, we believe, lowers execution risk and should contribute to investor confidence in the story. We continue to believe that Enovix is a highly disruptive company with a multi-year technology leadership position to take share of the sizable, growing market for lithium-ion batteries.”
Believing that Enovix has a bright future, Soderberg gives the stock an Overweight (i.e. Buy) rating, with a $25 price target to indicate potential for a robust 103% upside this year. (To watch Soderberg’s track record, click here)
It’s clear that Wall Street has no doubts on this one, as the Strong Buy consensus rating is based on a unanimous 8 positive analyst reviews. Enovix shares are trading for $12.31 and the $23.57 average price target implies a one-year upside gain of 91%. (See Enovix stock forecast)
Stifel Financial Corporation (SF)
Now we’ll turn to the world of finance, where Stifel Financial holds a high reputation as an independent investment bank, financial services firm, and wealth and asset manager. The firm boasts a $6 billion market cap, and as of the end of February, Stifel could boast of $1.3 billion in additional monthly bank deposits and held more than $401 million in total client assets.
Stifel has a strong commitment to returning capital to shareholders, and does so through a combination of share repurchases and dividend payments. In the final quarter of 2022, the company bought back some $75.2 million worth of common stock, contributing to a full-year total of $192.4 million in common stock repurchases. On the dividend front, Stifel has recently raised the payment. In the last declaration, the company set a payment of 36 cents per common share up 20% from the previous payment. This new payment was sent out on March 15, and the annualized rate of $1.44 per common share gives a yield of 2.4%.
In its recent 4Q22 financial results, Stifel’s report showed downward trends. Net revenues came in at $1.12 billion, down 14% year-over-year, and missing the consensus estimates of $1.14 billion. At the bottom line, the non-GAAP EPS came in at $1.58 – against a forecast of $1.64, for a 3.6% miss. These results came at the same time that the company’s overall Institutional Group segment saw a net revenue decline of 45%. On a positive note, the company’s Global Wealth Management segment’s net revenues saw an increase of 10%, to $744.3 million, year-over-year. This positive result was driven by a 105% y/y gain in quarterly net interest income.
Turning to the insiders, we find that two company officers have made million-dollar-plus share buys in SF over the past month. Company co-President James Zemlyak spent $1.12 million to buy 20,000 shares, and CEO Ronald Kruszewski bought 20,174 shares for $1.16 million.
In his coverage for JMP Securities, Devin Ryan, a highly-rated 5-star analyst, underscores the management’s robust belief in the company’s long-term prospects.
“Management remains quite adamant about the firm’s long-term growth potential, and with an estimated $1.2B of excess capital capacity over the next year, we see a number of opportunities to lean in further, including more aggressive share repurchases. Ultimately… we continue to argue that Stifel represents one of the most compelling risk/reward opportunities in our coverage at current levels as it has received little credit for the growth it has delivered to date and remains well positioned to grow from here,” Ryan opined.
Looking forward, Ryan sees plenty of potential, and rates Stifel shares as Outperform (i.e. Buy). His price target, set at $95, implies a gain of ~69% on the one-year time horizon. (To watch Ryan’s track record, click here)
Overall, SF shares have 5 recent analyst reviews, with a 2 to 3 breakdown favoring Holds over Buys, for a Moderate Buy consensus rating. The shares are trading for $56.28 and the $75 average price target suggests a 33% upside for the next 12 months. (See Stifel stock forecast)
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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.