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2 Stocks with Significant Insider Buying

Stock MarketsJun 03, 2021 04:30PM ET
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© Reuters. 2 Stocks with Significant Insider Buying

The purchase of a company’s shares by its own executives is usually regarded favorably because such buyers often have insight into a company’s growth drivers to which the public is not privy. Amid surging market volatility, we think betting on the share of Energy Transfer (NYSE:ET) and Patrick Industries (NASDAQ:PATK)—which have both been heavily bought by insiders—should yield substantial returns. Let’s discuss.High volatility in the United States stock market due to rising inflationary pressures and general price levels amid geopolitical tensions has resulted in modest gains in benchmark indexes and fluctuating share prices of most companies. The S&P 500 index and Nasdaq Composite have declined 0.7% and 1.4%, respectively, over the past five days. And the CBOE Volatility Index, which gauges market volatility and sentiment, has increased 10.8% over the same period.

However, the United States’ long term growth outlook remains favorable, driven by impressive job growth and proposed fiscal stimulus packages. Consequently, insiders are scooping up the shares of Energy Transfer LP (ET) and Patrick Industries, Inc. (PATK) because the companies are likely to grow in tandem with the economy. While rising oil prices should drive ET, PATK is expected to benefit from increasing manufacturing and industrial activities.

Owning shares of the company for which they work is considered a strong motivation for executives to ensure the company performs to the best of its ability. Similarly, an increase in insider buying is perceived as positive for a stock ideally because managers and top executives have intimate details of a company’s operations, business expansion and order flows that could be unknown to analysts and investors. So, substantial insider buying at a company could be an indication of its solid growth potential.

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2 Stocks with Significant Insider Buying
 

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Jack Seeley
Jack Seeley Jun 07, 2021 5:21PM ET
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makes sense
 
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