Insiders are buying PayPal and these 3 other struggling stocks. Should you?
Insiders can be wrong, but it’s generally a good sign when they buy shares as prices fall, suggesting any problems are temporary.
PayPal’s stock has been in a free fall since July 2021, wiping out two years of gains. At the beginning of February this year, the stock dropped even more dramatically. Three PayPal insiders used this opportunity to buy shares.
When insiders go on a buying spree, typically they’re confident the stock will be worth more in the future. Should you follow their lead?
We found four companies where insiders have been buying since the beginning of the year. This could give you a glimpse of where to look for your next opportunity.
1. PayPal
Three PayPal (PYPL) executives bought 20,000 shares worth around $2.5 million at an average price of $122.47. As of mid-February, the price is trading closer to $100, meaning you could get a better entry price.
Company executives aren’t the only ones buying the stock. PayPal has been consistently buying back shares. It bought 15.4 million shares in the fourth quarter for $3.4 billion. The company will likely keep buying shares for the same amount this year.
Most Refinitiv and TipRanks analysts reiterated their price targets for the next 12 months, with most making a lower projection. However, the average analyst price target for PayPal stands at $185, which is almost 80% higher than current prices.
2. Biodesix
Three Biodesix (BDSX) executives bought 2,600,000 shares worth around $11.3 million with an average price of $4.35. This is the highest value that insiders purchased so far this year.
Biodesix is a US diagnostic company focusing on lung disease. The company offers several products that include COVID tests, and blood panels to help diagnose lung cancer.
The company trades at around $3, a drop of almost 90% from its peak at $32 in early 2021. Morgan Stanley has a price target of $11 for the next 12 months.
3. Nextera Energy
Four insiders bought around 74,000 shares of Nextera Energy (NEE) worth approximately $5.7 million at an average price of $76.60. This is the second-largest insider purchase this year in terms of overall share value.
Nextera Energy is a holding company focusing on electric power and energy infrastructure in North America. One of its subsidiaries generates renewable energy from the wind and sun.
The company trades at a 20% discount from its peak at the beginning of the year. Most analysts have a buy rating on the stock with a price target of $91, which is 23% higher than the current price.
4. Cincor Pharma
Five Cincor Pharma (CINC) insiders bought around 342,000 shares at an average price of $16, which makes this transaction worth $5.4 million.
Cincor Pharma is a clinical-stage biotech company focused on treating hypertension and other cardiorenal diseases. Interestingly, it went public in January this year at an IPO price of $16, the same price the insiders scooped up the shares.
Since its IPO, the stock is up 56% to $25 per share, making it one of the best bets in companies where insiders bought shares this year.
Don’t take insider transactions for granted
Insiders can be wrong. This is only a guideline to help you find companies to invest in. Do your own due diligence before making financial decisions.
Kliment Dukovski doesn’t own shares of the companies mentioned in the article as of the publishing date.
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