4 Stocks Insiders Are Buying Even in Wildly Overbought Market
These names have seen notable insider purchases over the past month.
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Last Friday I noted that there was a huge uptick in insider selling in the third quarter. This supports my thesis that the overall market is significantly overbought based on a variety of historical valuation metrics such as price-to-sales and market cap versus U.S. GDP ratios. And while insider purchases remain quite sparse, there are several stocks that have seen notable insider buying over the past month.
Let’s start with a couple of energy-related names that beneficial owners have been scarfing up. Offshore drilling contractor Noble Corporation plc NE saw more than $60 million worth of equity purchased by a key beneficial owner in the month of November.
Noble operates a portfolio of jackups and floaters for the offshore oil and gas industry. In June the company announced a major acquisition of Diamond Offshore DO, which should provide significant synergies once that purchase is fully integrated. The company is projected to post solid revenue growth in 2024 and 2025 and the stock trades for under 11 times estimated 2025 EPS and yields 6%.
PBF Energy PBF, a refiner, continues to see enthusiastic buying from a beneficial owner that purchased over $45 million worth of shares in November alone and has already added more than $9 million to their stake early in December.
Declining crack spreads have caused profits to fall dramatically across the refining industry in 2024 and PBF looks like it will post a loss for 2024. Some of the company’s refinery capacity will also be negatively impacted by new laws proposed in California that will increase inventories needed to be kept on hand. However, the stock now trades for less than three times the profits the company made in 2023. PBF also recently boosted its dividend payout by 10% and now yields 3.5%.
Next up is rapidly growing health insurance concern Oscar Health OSCR. A co-founder as well as a beneficial owner added more than $40 million shares to their prospective holdings in November.
Oscar is expected to deliver revenue growth of more than 55% in 2024 and just under 30% in 2025. The company is also turning the corner around profitability. It is projected to end 2024 in the black with a small profit with a surge in earnings expected in 2025. The company is using a tech-driven model to disrupt this stodgy industry and also has a solid balance sheet.
We end today with Nerdy, Inc. NRDY whose stock has finally seen some signs of life in the past few weeks as it has regained listing compliance with the NYSE. The company is focused on online learning for K-8, high school, college, and professional licensing. Nerdy is transitioning to a subscription-based model.
Led by its CEO, insiders purchased more than $12 million worth of NRDY shares in November. This is probably the highest risk/reward play of the four stocks listed in this column. However, the company does seem to be lowering quarterly cash burn and has a rock-solid balance sheet. Insiders sure seem to be signaling Nerdy is heading in the right direction.
At the time of publication, Jensen was long NE, NRDY, OSCR and PBF.
