It’s always a good idea to pay attention to insider buying.
After all, insiders — the CEO, CFO or COO — know what’s really going on behind the scenes. If they’re buying, it may be a good idea to look into why, and perhaps follow them in.
These are the people who are privy to information on potentially new news, new products and their own competitive landscape. We also have to consider they wouldn’t put up their own money unless they thought the stock could be headed higher.
Granted, it’s not a good idea to buy just because an insider is doing so. You still want to do your own due diligence into why they’re buying, and if the stock is attractive for your own tastes.
Here are a few stocks of companies with insider buying to consider.
- Nvidia (NASDAQ:NVDA)
- Broadcom Inc. (NASDAQ:AVGO)
- Weyerhaeuser (NYSE:WY)
- Schlumberger (NYSE:SLB)
- Molson Coors Beverage (NYSE:TAP)
Insider Buying: Nvidia (NVDA)
Shares of Nvidia have had an amazing run in 2020. While most of the market buckled under the strain of the coronavirus, election jitters, and geopolitical pressures, NVDA stock more than doubled. In fact, since bottoming out in March at $180.54, the stock ran to a high of $559.
After a brief pullback to $513, I believe the NVDA stock could easily run back to $559, near-term. Company director Stephen C. Neal appears just as bullish, recently buying another 450 shares at an average price of $498.09. He now owns 3,978 shares.
Fueling a good amount of upside is its new graphics card for gamers. After all, games are very popular at the moment with the pandemic-fueled video-game boom. NVIDIA also just acquired Arm Holdings, a designer of chips for mobile phones for $40 billion.
In addition, according to Motley Fool contributor, Harsh Chauhan, “the pending acquisition of Arm could help NVIDIA accelerate its automotive development, as the former already has a wide presence in this space.”
Another explosive stock with insider buying is Broadcom. Since bottoming out in March at $150.14, the stock more than doubled to $365 a share. Chairman Henry Samueli picked up 101,740 shares of AVGO stock for $36.7 million.
Reportedly, that’s his first buy since 2003, according to Barron’s contributor Ed Lin.
There are a few things to like with this activity. For one, investors seem pleased with recent earnings and on news it expects for wireless sales to rebound in the coming months. “Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise,” said CEO Hock Tan.
Another hot stock to pay close attention to is Weyerhaeuser.
After pulling back from a September high of $30.87 to $27, WY stock is showing strong signs of rebounding. From here, I’d like to see the stock break well above triple top resistance. Director Albert Monaco appears bullish, buying 10,000 shares for an average price of $29.11.
Shares of WY could easily move even higher on supply-demand issues. According to Motley Fool contributor, Brent Myitray, CFA, “COVID-19-related production declines combined with an unexpected rebound in housing activity have created shortages” of lumber. With housing still showing plenty of signs of strength, WY could be a prime beneficiary.
Shares of Schlumberger haven’t had the best year.
Since 2020 began, the stock sank from a high of $39.59 to a current price of $16.76, where it just caught triple-bottom support. It was another top name to suffer with the oil slump. Plus, it cut its dividend. The oil-field servicer laid off a quarter of employees. And it said it would offload its hydraulic-fracturing unit. In short, SLB hasn’t had a great year at all.
However, it appears CEO Olivier Le Peuch hasn’t given up hope. Early in September, he paid $450,000 for 25,000 shares at an average price of $17.95. He now owns 191,770 shares. Director Mark G. Papa also paid $292,000 in early August for 15,000 shares of the SLB stock.
Molson Coors Beverage (TAP)
Shares of Molson Coors took a massive hit this year, too. Since the year began, tap stock tumbled from a February high of $61.24 to a current price of $33.56. The stock hasn’t been this cheap since 2012. Director Louis Vachon just bought 3,000 shares for an average price of $35.28.
Earlier this month, the company announced it would release a new offering of non-alcoholic products to reach more consumers. Thanks to the pandemic, beer sales are actually down. When we begin to see a vaccine for the virus, we may also see a rebound in beer sales, and beer stock valuations.
As The Daily Beast’s Lew Bryson wrote, “Think about it: how can beer sales be up when almost every place that sells beer by the pint is closed or only running at 25% capacity? No packed bars. No packed stadiums. No packed concert arenas. No packed race tracks. Given all the challenges of 2020, it boggles the mind that people could believe that somehow brands were raking it in or even doing OK.”
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.